149 10 3494 https://omeka.ibu.edu.ba/files/original/14491bc34f24a8b8dabb143dc5e26b64.pdf 0d24224a371a0443404f9e1a275bb0cf PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo ICSID Arbitration and Turkey in Terms of Subject and Party Süleyman Dost Süleyman Demirel University, Isparta, Turkey suleymandost@sdu.edu.tr The International Centre for Settlement of Investment Disputes (ICSID) is an autonomous international institution established under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID or the Washington Convention) with over one hundred and fifty five member States. Turkey signed and ratified ICSID Convention. The primary purpose of ICSID is to provide facilities for conciliation and arbitration of international investment disputes. ICSID has become the leading arbitration institution for the resolution of investor-state disputes. This arbitration system is different from the other arbitration. First of all, ICSID was established by the Convention as an impartial international forum providing facilities for the resolution of legal disputes between eligible parties, through arbitration procedures. Second, The Convention sought to remove major impediments to the free international flows of private investment posed by non-commercial risks and the absence of specialized international methods for investment dispute settlement. Third, recourse to the ICSID facilities is always subject to the parties' consent. Fourth, as evidenced by its large membership, considerable caseload, and by the numerous references to its arbitration facilities in investment treaties and laws, ICSID plays an important role in the field of international investment and economic development. Today, companies considering an investment in a foreign country, must be aware of ICSID and the other treaties providing access to ICSID. For example, Bilateral Investment Treaties (BIT’s) Energy Charter Treaty (ECT) and Multilateral Treaties (MIT’s). Turkey has signed namerous BIT’s with different countries. Furthermore, Turkey ratified the Energy Charter Treaty (ECT) that includes a provision regarding ICSID arbitration. Due to the steps taken by Turkey to create a more appropriate legal climate for investments during 90’s, foreign investors have brought eight arbitration cases before the ICSID against Turkey since 2002. In this study, firstly, ICSID arbitration system and arbitration cases against Turkey will be taken hand. Then Turkish investor’s cases against host state will be indicate. Finally general assesment will be made for Turkey and the other parties of ICSID Convention. Keywords: Arbitartion, Investment, ICSID, Turkey. 262 � https://omeka.ibu.edu.ba/files/original/f817e6ff095b88079775c9227c4a1de6.docx ee55b407fc14ec37b73a9d61eaf3be15 https://omeka.ibu.edu.ba/files/original/f16c3cef72816b730b029b3c6f2fb7af.pdf 2a85b32a40aa1df4f57d031bb31baf8f PDF Text Text International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo ICSID Arbitration and Turkey in Terms of the Subject and Parties Suleyman Dost Suleyman Demirel University, Isparta, Turkey suleymandost@sdu.edu.tr Abstract The International Centre for Settlement of Investment Disputes (ICSID) is an autonomous international institution established under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID or the Washington Convention) with over one hundred and fifty five member States. Turkey signed and ratified ICSID Convention. The primary purpose of ICSID is to provide facilities for conciliation and arbitration of international investment disputes. ICSID has become the leading arbitration institution for the resolution of investorstate disputes. This arbitration system is different from the other arbitration. First of all, ICSID was established by the Convention as an impartial international forum providing facilities for the resolution of legal disputes between eligible parties, through arbitration procedures. Second, The Convention sought to remove major impediments to the free international flows of private investment posed by noncommercial risks and the absence of specialized international methods for investment dispute settlement. Third, recourse to the ICSID facilities is always subject to the parties' consent. Fourth, as evidenced by its large membership, considerable caseload, and by the numerous references to its arbitration facilities in investment treaties and laws, ICSID plays an important role in the field of international investment and economic development. Today, companies considering an investment in a foreign country, must be aware of ICSID and the other treaties providing access to ICSID. For example, Bilateral Investment Treaties (BIT’s) Energy Charter Treaty (ECT) and Multilateral Treaties (MIT’s). Turkey has signed namerous BIT’s with different countries. Furthermore, Turkey ratified the Energy Charter Treaty (ECT) that includes a provision regarding ICSID arbitration. Due to the steps taken by Turkey to create a more appropriate legal climate for investments during 90’s, foreign investors have brought eight arbitration cases before the ICSID against Turkey since 2002. In this study, firstly, ICSID arbitration system and arbitration cases against Turkey will be taken hand. Then Turkish investor’s cases against host state will be indicate. Finally general assesment will be made for Turkey and the other parties of ICSID Convention. Key Words:arbitration, Investment, ICSID, Turkey. Introduction ICSID Convention, which came into force on 14th October 1966 established an International Centre for Settlement of Investment Disputes. This Convention, which is also referred to as Washington Convention came into force in Turkey on 02nd.04.1989. ICSID 1 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Convention mainly aims to stop disputes being a political tool and a threat factor and resolve the disputes on a platform where the benefits of both parties are balanced. (Emek, 27)The Convention provides the ways of conciliation and arbitration for that. 464 applications have been registered so far. 255 of these have been concluded1 and 169 of them are still on trial2. Applications show that, disputes mainly come up in areas of banking, construction, energy, health, industry, mining, tourism and agriculture3. ICSID (The International Centre) established within the body of the World Bank offers an objective and reliable arbitration case in the resolution of disputes between foreign investors and the host state. The Centre also aims to clear the concerns of foreign investors and to motivate them for investing in foreign states and to reduce the negative attempts of the host state towards investment. ICSID Arbitration Trial authority of the Centre covers legal disputes between states that are a party to ICSID Convention and the citizens of other states that are also a party to ICSID Convention, who have submitted their written consent related to the dispute to the General Secretariat. After the submission of consent, no party can withdraw it back unilaterally (Article 25 of the ICSID). Trial authority of the ICSID Arbitration Centre depends on three factors: The first one is the presence of a legal benefit dispute, arising directly out of the investment. The second one is the consents of the parties. And the third one is the requirement that the host state and the sending state are both parties to the ICSID Convention. (Sassoon, 102)So, it is possible to discuss the trial authority of the Centre with respect to the subject of the trial, parties of the dispute and consents of the parties (Nomer et al., 54): 1-Trial Subject In the presence of a subject relevant to the tribal authority of the Centre, there has to be a legal dispute directly related to investment as a first condition4. (De Cassio, 230; Amerasinghe, 636)Consequently; political, economic, financial or commercial disputes are included within the scope of ICSID trial. (De Cassio, 230) As the Convention not defines investment, wills of parties shall be studied. (Azrak, 27; Wagner, 472; Kurtz, 20) In ICSID arbitration, troubles related to subject limitation are too rare. (Park et al., 453; Hornick, 189; Escobar, 140) Any kind of dispute related to investment can generally be a trial subject in an ICSID arbitration system. However; expenses made by the Claimant prior to investment are not regarded as investments with respect to Article 25 of ICSID5. 2-Parties According to ICSID Convention, one of the parties is a state party to the Convention and the other party is the citizen of another state which also is a party to the Convention (Article 25 of the ICSID). So, disputes, parties of which are real and/or special legal entities or states are outside the authority of ICSID. One party of the dispute is the host state where the investment is made. In order for a dispute to be resolved by ICSID arbitration, the host state shall be a party to ICSID and 1 See: https://icsid.worldbank.org (23.04.2013) See: https://icsid.worldbank.org (23.04.2013) 3 See: https://icsid.worldbank.org (23.04.2013) 4 See for additional knowledge: Mihaly - Sri Lanka, Award, ICSID Case No:00/2, p.32. 5 Mihaly - Sri Lanka, Award, ICSID Case No:00/2, p.28-33, 52-54, ve 61-62. 2 2 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo have consent on arbitration issue. Moreover it is allowed that; the subunits forming any country or the state which has assigned a representative to the Centre is a party to the dispute (Erten, 216; Tawil, 278). The other party of the dispute is the citizen of another state which is a party to the ICSID Convention (De Cassio, 230). This statement expresses the real or legal entities possessing the citizenship of a state party apart from the home state which was a partof the Centre at the date when the application was submitted to the Centre (Article 25/2-a of the ICSID). In case of dual citizenship, the investor can apply for ICSID arbitration if the state he/she is a citizen of is a party to the ICSID Convention6 (Nomer et al., 55). 23 ICSID Convention accepts that, if a prior agreement is made, companies under the control of foreign powers will be treated in the host state as a citizen of another state which is a party to the Convention (Article 25/2-b of the ICSID). 3-Written Arbitration Convention In order for an international investment dispute to be resolved by ICSID arbitration, there must be a relevant written arbitration convention carried out between parties. This is an obligatory condition for the beginning of ICSID arbitration procedure (sine qua non condition). A valid arbitration deal means consent to arbitration. This consent relation can be provided with an arbitration condition or an independent arbitration deal (De Cassio, 229). Parties might give this consent before or after dispute (Günuğur,339). In most of the disputes that come up in practice, this consent is given on the condition of arbitration put into the investment agreement (Nomer et al., 54). This consent is also given in BIT’s carried out between states. States that have signed the ICSID Convention doesn’t mean that they give consent (Amerasinghe, 636; Şanlı, 9). This shows the states’ desire to get into an ICSID arbitration system. It doesn’t pose an obligation7 (Erten, 218). Declaration of consent for arbitration shall be given for a certain dispute. Being a party to the ICSID Convention doesn’t require parties to give consent for applying for ICSID arbitration for the resolution of a dispute included within the scope of the Convention (De Cassio, 229). On the other hand; some consent declaration might not cover the consent required by the Convention for the tribal authority of the Centre. However; once the parties have submitted their consents to the Centre, it is not possible for them to withdraw these back unilaterally8 (Sassoon, 103). Consents of the parties for arbitration within the framework of the Convention means they have rejected any solution outside the Convention unless stated otherwise. However; states might demand as a prior condition for these consents that, local administrations and legal ways have been exhausted (Article 26 of the ICSID). On the other hand; the Convention allows states to make declaration for the types of disputes they don’t want to put through ICSID arbitration any time. (Article 25/4 of the ICSID). This means, providing that they make the necessary declaration, they can restrict their membership to the Centre as long as they desire. Consequently; foreign investors shall study and monitor the concerns put into the Convention by the host state. Because in some cases, signing of the ICSID Convention might only be for promotional reasons (Altıntaş, 19). 36 6 Olguin - Paraguay, Award, ICSID Case No:98/5, p.60-61. CSOB - Slovak Republic, Decision, ICSID Case No:97/4, p.36. 8 Article 25 of the ICSID. 7 3 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo ICSID Arbitration and Turkey In General Turkey signed the ICSID Convention on 24th.06.1987 and approved it with Law No 3460 dated as 27th.05.1988. 37So far, eight disputes have been submitted to ICSID arbitration against Turkey. And thirteen Turkish origin companies have applied for ICSID arbitration against various states. The amounts both in arbitration cases sued against Turkey and sued by Turkish origin companies are quite high. Thus; ICSID arbitration is very important. Here, ICSID arbitration cases against Turkey will be discussed first and then, ICSID arbitration cases sued by Turkish citizens against various states will be discussed. Cases against Turkey Here, concluded cases against Turkey will be discussed first and then, cases still in progress will be discussed. Concluded Cases 1-PSEG Global Inc. and Konya Ilgin Elektrik Üretim ve Ticaret Limited Sirketi v. Republic of Turkey9 The first application to ICSID against Turkey was the application of an enterprise consisting of PSEG Global Inc. and Konya Ilgın Elektrik Üretim ve Ticaret Limited Şti., which was registered on 2nd May 2002. The arbitration procedure carried out for the dispute arising from the Electricity power plant project was concluded on 19thJanuary 2007. Turkey was given a penalty of 9 million USD Dollars of compensation and it was required to pay 65% of the costs of the case. 2-Motorola Credit Corporation, Inc. v. Republic of Turkey10 The application made by the American Motorola company was registered on 04th January 2004. As parties came to a mutual agreement, the dispute on communication networks was ended on 21st November 2005 by the Tribunal according to Cl. 43/1 of ICSID Arbitration Rules. There are no documents issued about this case. This case is a one that was ended after the mutual agreement of the parties after the arbitration process had started. 3-Saba Fakes v. Republic of Turkey11 The arbitration procedure started upon the application of Netherlander Saba Fakes on 13th August 2007 was concluded on 14th July 2010. The case won about mobile communication services and Turkey the case. It was claimed that Telsim, whose shares mostly belonged to the claimant, was seized by Turkey and sold to a third party. In return, Turkey claimed that the investment on trial didn’t either carry the “investment” conditions stated in BIT made between Turkey and Holland or the ICSID Convention Cl. 25/1. The tribunal acknowledged that Turkey was right in its defense. 9 PSEG Global Inc. and Konya Ilgin Elektrik Üretim ve Ticaret Limited Sirketi v. Republic of Turkey,ICSID Case No. ARB/02/5. 10 Motorola Credit Corporation, Inc v. Republic of Turkey,ICSID Case No. ARB/04/21. 11 Saba Fakes v. Republic of Turkey, ICSID Case No. ARB/07/20. 4 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo 4-Europe Cement Investment and Trade S.A. v. Republic of Turkey12 The application submitted by the Polish Europe Cement Company was registered on 6 th March 2007. The arbitration case performed within the framework of the Additional Facility Rules of ICSID was about electricity concession and Turkey won the case on 13th August 2009. In the case, the claimant claimed that it was the owner of ÇEAŞ and Kepez Electricity shares and was injured as Turkey seized these companies. Respondent Turkey claimed that, owners of ÇEAŞ and Kepez Electricity had not carried out the required legal procedures and declarations for transfer. Turkey also stated that, the claimant didn’t possess the “investor” charter defined in Energy Charter Treaty. The tribunal concluded the case for non-authority, it found Turkey right. 5-Cementownia “Nowa Huta” S.A. v. Republic of Turkey13 The application made by Polish Cementownia “Nowa Huta” Company was registered on 16th November 2006. The case was about electricity concession. The case was resolved within the framework of ICSID’s Additional Facility Rules as Poland was not a party to the ICSID Convention. In the case, the claimant claimed that it was the owner of ÇEAŞ and Kepez Electricity shares and was injured as Turkey seized these companies. Respondent Turkey claimed that, owners of ÇEAŞ and Kepez Electricity had not carried out the required legal procedures and declarations for transfer. Turkey also stated that, the claimant didn’t possess the “investor” charter defined in the Energy Charter Treaty. The case was concluded on 17th September 2009 and Turkey won it. Cases Still in Progress 1-Libananco-Republic of Turkey14 Another application submitted to ICSID against Turkey is the application of Libananco Company from Southern Cyprus. Application of Libananco submitted to ICSID against Turkey was registered on 19th April 2006. The case was about electricity generation and distribution concession. Republic of Turkey’s Ministry of Energy seized the current assets of ÇEAŞ and Kepez Electricity based on the claim that it failed to fulfill its undertakings stated in the Concession Contract. Libananco Company on the other hand claimed that, it owned 66% of these seized company’s assets and was injured by this seizure. Respondent Turkey claimed that the owners of ÇEAŞ and Kepez Electricity had failed to fulfill the legal procedures and make necessary declarations. Turkey further claimed that the Claimant didn’t fulfill the “investor” charter defined in the Energy Charter Treaty. The case was concluded on 2nd September 2011 and Turkey won it. On 20th December 2011, Libananco Company applied for the cancellation of the decision. The trial performed upon this application for cancellation is still in progress. 2- Alaplı Electric B.V. v. Republic of Turkey15 An arbitration trial made upon Netherlander Alaplı Elektrik’s application on 27th August 2008 was concluded on 16th July 2012. Turkey won the case about the dispute about electricity concession. Judge Marc Lalonde lodged a statement of opposition to the decision and on 16th November 2012, a cancellation application was made to present new evidences. The trial performed upon the application for cancellation is still in progress. 12 Europe Cement Investment and Trade S.A. v. Republic of Turkey, ICSID Case No. ARB(AF)/07/2. Cementownia "Nowa Huta" S.A. v. Republic of Turkey, ICSID Case No. ARB(AF)/06/2. 14 Libananco Holdings Co. Limited-Republic of Turkey, ICSID Case No: ARB/06/8. 15 Alaplı Elektrik B.V. v. Republic of Turkey, ICSID Case No. ARB/08/13. 13 5 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo 3-Tulip Real Estate Development Netherlands B.V. v. Republic of Turkey16 The application of Tulip Real Estate Development Netherlands against Turkey was registered on 28th October 2011. The dispute arises from the residential and commercial construction project. Arbitration trial is still in progress. Evaluation In ICSID arbitration trial process started by Libananco, Europe Cement and Cementownia “NowaHuta” against Turkey, it was investigated whether claimants possessed the conditions of an investor within the framework of the ICSID Convention, Energy Charter and BIT. In these trials, tribunals decided that claimant investors did not fulfill the “investor” conditions defined in the relevant regulations. According to domestic legislation, the claimant should have recorded the registered shares into the shareholders’ register of the company after the submission of endorsements and commercial papers. However, claimants didn’t fulfill these conditions. Furthermore; it was concluded in these trials that claimants acted in bad faith. The same thing is true for the Saba Fakes case. This case sued against Turkey by PSEG/Ilgın is the first experience of Turkey in ICSID arbitration case. In this case, the arbitration tribunal regarded the dispute arising from the concession contracts as an investment dispute within the scope of the ICSID Convention and BIT. The tribunal stated that, current regulations and BIT showed Turkey had consent for ICSID trial and so rejected Turkey’s opposition that no resolution procedure was set forth in BIT. The tribunal also rejected claimant investor’s some claims related to the base of dispute. The tribunal also concluded that the investor failed to fulfill some of its obligations set forth in Law No 4501. In conclusion; although Turkey was sentenced to pay compensation to the claimant, the claimant was unable to get the result it desired. Cases of Turkish People/Companies Today, Turkey has come to be a home state as well as a host state. Consequently, Turkish citizens and companies investing in foreign states that are parties to ICSID Convention can also apply to ICSID arbitration. Arbitration trials started withfive Turkish companies against host states have been concluded so far and arbitration trials of eight more companies are still in progress. Turkish companies will also have their disputes related to investments in ICSID arbitration henceforward. Concluded Cases 1-Bayındır Insaat Turizm Ticaret ve Sanayi A.S. v. Islamic Republic of Pakistan17 Arbitration application made by Turkish Bayındır Insaat Turizm Ticaret ve Sanayi A.S.Against Pakistan was registered on 1st December 2003. The case, the dispute subject of which was highway construction contract, was concluded on 27th August 2009 and Pakistan won the case. 16 17 Tulip Real Estate and Development Netherlands B.V. v. Republic of Turkey, ICSID Case No. ARB/11/28. Bayındır Insaat Turizm Ticaret Ve Sanayi A.S. v. Islamic Republic of Pakistan, Case No. ARB/03/29. 6 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo 2-Rumeli Telekom A.S. & Telsim Mobil Telekomunikasyon Hizmetleri A.S. v. Republic of Kazakhstan18 Arbitration application made by Turkish Rumeli Telekom A.S. & Telsim Mobil Telekomunikasyon Hizmetleri A.S. Against Kazakhstan was registered on 30th August 2006. The case, the dispute subject of which was telecommunication, was concluded on 29th July 2009. However; cancellation application was made on 7th November 2009. The decision was given on 25th March 2010. 3-Sistem Muhendislik Insaat Sanayi ve Ticaret A.S. – Kyrgyz Republic19 Arbitration application made by Turkish Sistem Muhendislik Insaat Sanayi ve Ticaret A.S. Against Kyrgyzstan was registered on 12th April 2006. The case, the dispute subject of which was a hotel construction project, was concluded on 9th September 2009. 4-Barmek Holding A.S. v. Republic of Azerbaijan20 Arbitration application made by Turkish Barmek Holding A.S.Against Azerbaijan was registered on 16th October 2006. The case, the dispute subject of which was electricity concession, was concluded on 28th September 2009 with the agreement of the parties according to Rule 43/2 of the ICSID Arbitration Rules. 5-ATA Construction, Industrial and Trading Company v. Kingdom of Jordan Arbitration application made by Turkish ATA Construction, Industrial and Trading Companyagainst Kingdom of Jordan was registered on 28thFeb 2008. The case, the dispute subject of which wasWaterway Construction Project, was concluded on 18thMay 2010. However; cancellation application was made on 27thSeptember 2010. The ad hoc Committee issues an order taking note of the discontinuance of the proceeding pursuant to ICSID Arbitration Rule 44, on July 11, 2011. Cases Still in Progress 1-Adem Doğan v. Turkmenistan21 Arbitration application made by Turkish citizen Adem Doğan against Turkmenistan was registered on 22nd May 2009. The dispute subject of the case is a chicken farm and the case is still in progress. 2-Kilic Insaat Ithalat Ihracat Snayi ve Ticaret Anonim Şirketi v. Turkmenistan22 Arbitration application made by Turkish Kilic Insaat Ithalat Ihracat Sanayi ve Ticaret Anonim Sirketi against Turkmenistan was registered on 19th January 2010. In the case, the dispute subject of which is a construction project, on 7th May 2012 the Arbitration tribunal gave the decision that the claimant had to apply to local jurisdiction at first according to the BIT made between Turkey and Turkmenistan. Consequently; the arbitration case is still in progress. 18 Rumeli Telekom A.S. & Telsim Mobil Telekomunikasyon Hizmetleri A.S. v. Republic of Kazakhstan, Case No: ARB/05/16. 19 Sistem Muhendislik Insaat Sanayi ve Ticaret A.S.-Kyrgyz Republic, Case No: ARB (AF) /06/1. 20 Barmek Holding A.S. v. Republic of Azerbaijan (ICSID Case No. ARB/06/16) 21 Adem Dogan v. Turkmenistan, ICSID Case No. ARB/09/9. 22 Kilic Insaat Ithalat Ihracat Sanayi ve Ticaret Anonim Sirketi v. Turkmenistan, ICSID Case No. ARB/10/1. 7 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo 3-Ömer Dede and Serdar Elhüseyni v. Romania23 Arbitration application made by Turkish Ömer Dede against Romania was registered on 19th November 2010. The case, the dispute subject of which is agricultural machines and equipments, is still in progress. 4-Içkale Insaat Limited Sirketi v. Turkmenistan24 Arbitration application made by Turkish Ickale Insaat Limited Sirketi against Turkmenistan was registered on 20th December 2010. The case, the dispute subject of which is designing and construction contract, is still in progress. 5-Turkiye Petrolleri Anonim Ortaklığı v. Republic of Kazakhstan25 Arbitration application made by Turkish Fuel Oils Incorporated Partnership (TPAO in Turkish) against Kazakhstan was registered on 14th January 2011. The case, the dispute subject of which is Fuel oils search and production, is still in progress. 6-Garanti Koza LLP v. Turkmenistan26 Arbitration application made by Turkish Garanti Koza against Turkmenistan was registered on 20th July 2011. The case, the dispute subject of which is a construction project, is still in progress. 7-Muhammet Çap & Sehil Insaat Endustri ve Ticaret Ltd. Sti. v. Turkmenistan27 Arbitration application made by Turkish Muhammet Çap & Sehil Insaat Endustri ve Ticaret Limited Sirketi against Turkmenistan was registered on 26th March 2012. The case, the dispute subject of which is a construction project, is still in progress. 8-Karkey Karadeniz Elektrik Üretim A.S. v. Islamic Republic of Pakistan28 Arbitration application made by Turkish Karkey Karadeniz Elektrik Üretim Anonim Sirketi against Pakistan was registered on 8th February 2013. The case, the dispute subject of which is, energy generation equipment, is still in progress. Conclusion The following can be stated about ICSID Convention and Turkey under the light of the above mentioned decisions: 1-Turkey is a home state as well as a host state. Consequently, international arbitrations have now become a way for jurisdiction Turkish enterprises can apply to for the disputes arising from their international investments. 2-ICSID arbitration where one of the parties is a state is the most appropriate way of jurisdiction for the resolution of disputes arising from foreign investments. International commercial arbitration and particularly the ICSID arbitration is superior to the decisions given by foreign state courts. Because parties have the right to specify their own judge and the ways and principles they are going to use in their arbitration cases. 23 Ömer Dede and Serdar Elhüseyni v. Romania ICSID Case No. ARB/10/22. Içkale Insaat Limited Sirketi v. Turkmenistan ICSID Case No. ARB/10/24. 25 Türkiye Petrolleri Anonim Ortaklığı v. Republic of Kazakhstan (ICSID Case No. ARB/11/2) 26 Garanti Koza LLP v. Turkmenistan (ICSID Case No. ARB/11/20) 27 Muhammet Çap & Sehil Inşaat Endustri ve Ticaret Ltd. Sti. v. Turkmenistan (ICSID Case No. ARB/12/6) 28 Karkey Karadeniz Elektrik Uretim A.S. v. Islamic Republic of Pakistan(ICSID Case No. ARB/13/1) 24 8 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo 3-Attracting foreign investments are among the priorities of Turkey just like all other developing countries. Foreign investors accepts international arbitration as one of the most significant elements of a legally reliable environment to invest in another country. Consequently; arbitration is a preferable resolution area for disputes in investment contracts. 4-Arbitration decisions given within the framework of ICSID Convention are binding for all members. The decision in question can be applied as a decision given by the national court of the member state. 5-It shall also be kept in mind that; ICSID arbitration system is the guarantee of the investments to be carried out by Turkish enterprises in foreign states. 6-In cases sued by foreign investors against Turkey, Turkey has mostly treated then investor in a fair way and conformed to the terms of multiple party treaties like BIT and Energy charter. In this sense, it can easily be said that Turkey is a suitable state for foreign investors. References Amerasinge, C.F., (2002).Jurisdiction of International Trubunals.Leiden, NLD:Brill, N.H.E.J., N.V. Koninklijke, Boekhandel en Drukkerj. Altıntaş, M. A., (1998).Uluslararası Yatırımların Korunması, Temel Uyuşmazlıklar ve Tahkim Kurulları.Hazine Dergisi, Sayı:10. Azrak, A.Ü., (1999).İdari Sözleşmeler ve Uluslararası Tahkim-Panel. Türkiye Barolar Birliği, Ankara. De Cassio, F. 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Lessons from Chapter 11 of NAFTA and the OECD Multilateral Agreement on Investment. Jean Monnet 9 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Working Paper 6/02, New York University School of Law, New York.Retrieved 23.04.2013 fromwww.jeanmonnetprogram.org/papers/02/020601.pdf. Nomer, E., Ekşi, N. &Gelgel, G.,(2000).Milletlerarası Tahkim, İstanbul. Park, W., Bjorklund, A.K.&Coe, J.J., International Commercial Dispute Resolution. The International Lawyer, Volume:37, No:2. Sassoon, D.M., (1993).International Investment and Dispute Settlement.Conflict Resolution in International Trade (Symposium), (Editors: D. Friedman&E.J. Mestmacker) Nomos Verlagsgeselschaft Baden-Baden. Şanlı, C., (1999).İdari Sözleşmeler ve Uluslararası Tahkim-Panel.Türkiye Barolar Birliği, Ankara. Tawil, G.S., Commentary:ICSID Jurisdiction and the Request For Arbitration.Arbitration International, Vol:18, No:3. Wagner, J. M., (1999).International Investment, Expropration and Environmental Protection., Golden Gate University Law Rewiev, Volume:29, Issue:465. Awards of ICSID (Awards retrieved 23.04.2013, from https://icsid.worldbank.org) Adem Dogan v. Turkmenistan, ICSID Case No. ARB/09/9. Alaplı Elektrik B.V. v. Republic of Turkey, ICSID Case No. ARB/08/13. Barmek Holding A.S. v. Republic of Azerbaijan, ICSID Case No. ARB/06/16. Bayındır Insaat Turizm Ticaret Ve Sanayi A.S. v. Islamic Republic of Pakistan, Case No. ARB/03/29. Cementownia "Nowa Huta" S.A. v. Republic of Turkey, ICSID Case No. ARB(AF)/06/2. CSOB - Slovak Republic, Decision, ICSID Case No:97/4, p.36. Europe Cement Investment and Trade S.A. v. Republic of Turkey, ICSID Case No. ARB(AF)/07/2. Garanti Koza LLP v. Turkmenistan, ICSID Case No. ARB/11/20. Içkale Insaat Limited Sirketi v. Turkmenistan, ICSID Case No. ARB/10/24. Karkey Karadeniz Elektrik Uretim A.S. v. Islamic Republic of Pakistan,ICSID Case No. ARB/13/1. Kilic Insaat Ithalat Ihracat Sanayi ve Ticaret Anonim Sirketi v. Turkmenistan, ICSID Case No. ARB/10/1. Libananco Holdings Co. Limited-Republic of Turkey, ICSID Case No: ARB/06/8. 10 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Mihaly - Sri Lanka, Award, ICSID Case No:00/2, p.32. Motorola Credit Corporation, Inc v. Republic of Turkey,ICSID Case No. ARB/04/21. Muhammet Çap & Sehil Inşaat Endustri ve Ticaret Ltd. Sti. v. Turkmenistan, ICSID Case No. ARB/12/6. Olguin - Paraguay, Award, ICSID Case No:98/5, p.60-61. Ömer Dede and Serdar Elhüseyni v. Romania, ICSID Case No. ARB/10/22 PSEG Global Inc. and Konya Ilgin Elektrik Üretim ve Ticaret Limited Sirketi v. Republic of Turkey,ICSID Case No. ARB/02/5. Rumeli Telekom A.S. & Telsim Mobil Telekomunikasyon Hizmetleri A.S. v. Republic of Kazakhstan, Case No: ARB/05/16. Saba Fakes v. Republic of Turkey, ICSID Case No. ARB/07/20. Sistem Muhendislik Insaat Sanayi ve Ticaret A.S.-Kyrgyz Republic, Case No: ARB (AF)/06/1. Tulip Real Estate and Development Netherlands B.V. v. Republic of Turkey, ICSID Case No. ARB/11/28. Türkiye Petrolleri Anonim Ortaklığı v. Republic of Kazakhstan, ICSID Case No. ARB/11/2. 11 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1618 Title A name given to the resource ICSID Arbitration and Turkey in Terms of Subject and Party Author Author DOST, Suleyman Abstract A summary of the resource. The International Centre for Settlement of Investment Disputes (ICSID) is an autonomous international institution established under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID or the Washington Convention) with over one hundred and fifty five member States. Turkey signed and ratified ICSID Convention. The primary purpose of ICSID is to provide facilities for conciliation and arbitration of international investment disputes. ICSID has become the leading arbitration institution for the resolution of investor-state disputes. This arbitration system is different from the other arbitration. First of all, ICSID was established by the Convention as an impartial international forum providing facilities for the resolution of legal disputes between eligible parties, through arbitration procedures. Second, The Convention sought to remove major impediments to the free international flows of private investment posed by non-commercial risks and the absence of specialized international methods for investment dispute settlement. Third, recourse to the ICSID facilities is always subject to the parties' consent. Fourth, as evidenced by its large membership, considerable caseload, and by the numerous references to its arbitration facilities in investment treaties and laws, ICSID plays an important role in the field of international investment and economic development. Today, companies considering an investment in a foreign country, must be aware of ICSID and the other treaties providing access to ICSID. For example, Bilateral Investment Treaties (BIT’s) Energy Charter Treaty (ECT) and Multilateral Treaties (MIT’s). Turkey has signed namerous BIT’s with different countries. Furthermore, Turkey ratified the Energy Charter Treaty (ECT) that includes a provision regarding ICSID arbitration. Due to the steps taken by Turkey to create a more appropriate legal climate for investments during 90’s, foreign investors have brought eight arbitration cases before the ICSID against Turkey since 2002. In this study, firstly, ICSID arbitration system and arbitration cases against Turkey will be taken hand. Then Turkish investor’s cases against host state will be indicate. Finally general assesment will be made for Turkey and the other parties of ICSID Convention. Keywords: Arbitartion, Investment, ICSID, Turkey. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 978-9958-834-23-3 https://omeka.ibu.edu.ba/files/original/00166fa5f41a327975a516f86afbe875.docx 614633e164641b3e00cf002fc4e19f2f https://omeka.ibu.edu.ba/files/original/08975ef43e5c19735db5ff4e01d30681.pdf b69d15b3a5f347a49a44ef0708b5904e PDF Text Text International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Price Discrimination Approach on the Example of UniCredit Bank dd Mostar Nađa Dreca International University of Sarajevo nadja_n88@hotmail.com Abstract The aim of this study is to clarify the concept of the price discrimination and to show how this concept is used in banking business on the example of the UniCredit Bank dd Mostar. Price discrimination refers to any no uniform pricing policy used by a firm with market power to maximize its profit. Price Discrimination leads to change in both, quantity and price. So it is also called no uniform pricing, charging customers different prices for the same product or charging the single customer a price that varies depending how many units the customer buys. There are 3 degrees of Price Discrimination. :1st degree is different prices for both consumers and units, 2nd degree is different prices for different units and 3rd degree is different prices to different consumers. UniCredit Bank d.d. was the first bank in Bosnia and Herzegovina that introduced a new, unique approach to client service model. The basic characteristic of the whole business of the Bank was actually based on the segmentation of clients (existing and new-potential) with complex business lines. The business lines included meeting the needs of clients and facing in accordance with their capabilities and needs. Characteristics of the business model UniCredit Bank dd was the segmental approach to the client, so that the clusters of customers would fit similar characteristics, preferences and market position, and assign them a special service model defined by each business line. JES! Package account is present on the market since 2006 in the form of 4 different models adapted to the needs of the client and used by more than 50,000 customers. JES! Account package is available in several different models - Optimum, Expert, Student and Senior. Account package is also practical, useful, stylish and affordable. Keywords:Price Discrimination, Different Customers,Profit, UniCredit Bank, Banking Products, client service model Introduction Instead of setting a single price some firms can use the no uniform pricing, which means charging consumers different prices for the same product or charging single customer a price that depends on the number of units the customers buy. By replacing a single price with no uniform pricing the firm raises its profits .Price discrimination refers to any no uniform pricing policy used by a firm with market power to maximize its profit. Price Discrimination 1 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo A monopoly that uses no uniform prices can capture some or all of the customer surplus and deadweight loss that results if the monopoly sets a single price. For almost any good or service, some customers are willing to pay more than others. A firm that sets a single price faces a trade-off between charging customers who really want the good as much as they are willing to pay and charging a low enough price that the firm does not lose the sales to less enthusiastic customers. A firm can earn a higher profit by price discrimination than from setting single price. For customers who are willing to pay more, the firm sets higher price and capture some or all consumer surplus, and firm sells to some people who were not willing to pay as much as the uniform price. In order to perform price discrimination firms must satisfy certain conditions: 1. A firm must have some market power; 2. The firm must be able to identify whom to charge the higher price-elasticity of demand; 3. Prevent or limit resale. There are three main degrees of Price Discrimination. 1st degree is different prices for both consumers and units 2nd degree is different prices for different units 3rd degree is different prices to different consumers First degree (perfect) price discrimination occurs when firm sells each unit at the maximum amount any customer is willing to pay for it, so the prices differ across customers and a given customer may pay more for some units than for others. In this case a monopoly is able to charge the maximum each consumer is willing to pay for each unit of product. A firm with market power could collect the entire consumer surplus if it could charge each customer exactly the price that that customer was willing and able to pay (reservation price). Second degree (quantity) price discrimination is when the firm charges different price for large quantities than for small quantities, so the price paid by a buyer can vary with the quantity demanded by the buyer, but all customers face the same price schedule. Third degree (multimarket) price discrimination occurs when firm charges consumers in different groups different unit prices. Price paid by buyers in a given group is the same for all units purchased, but price may differ across buyer groups ( Perloff, 2009). About the UniCredit Bank UniCredit Bank was created by the merger of UniCredit Zagrebacka Bank and HVB Central Profit Bank, 04.03.2008.year. With total assets of over 3.5 billion KM, capital of 350 million KM, and over 850,000 clients, the Bank operates through a network of 96 branches covering the whole territory of Bosnia and Herzegovina. UniCredit Bank d.d. was the first bank in Bosnia and Herzegovina that introduced a new, unique approach to client service model. The basic characteristic of the whole business of the Bank was actually based on the segmentation of clients (existing and new-potential) with complex business lines. The business lines included meeting the needs of clients and facing in accordance with their capabilities and needs. Characteristics of the business model UniCredit Bank dd was the segmental approach to the client, so that the clusters of customers would fit similar characteristics, preferences and market position, and assign them a special service model defined by each business line. This would be with 2 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo particularly educated and assigned personal bankers or the head of a business relationship. With this organization and education of employees, UniCredit Bank is able to identify needs and meet the expectations of its clients, as legal persons and citizens. Bank customers, according to its flow into an account and savings are classified into a number of categories: lower mass, mass, mass and upper income affluent clients. According to this classification they are assigned to their family or personal banker. ( UniCredit Bank) Price Discrimination Example The example of price discrimination in the selected bank is represented by the type of banking product they sell. JES! Package account is present on the market since 2006 in the form of 4 different models adapted to the needs of the client and used by more than 100,000 customers. JES! Account package is also practical, useful, stylish and affordable. This way of the price discrimination represents all three degree of price discrimination, as well as price discrimination done by bundling or Tie-In Sales .Besides banking products and services, the JES Package as an anchor product of the Bank also provides a range of non-banking services and facilities thereby enriching and facilitating the everyday lives and businesses of clients which so far have been recognized by over 100.000 satisfied users. This type of banking products is described by the following characteristics: Convenient to the clients- banking products and services are offered in the one package account, together with numerous non-banking privileges, also with better price than buying each product individually. Saves time and money - certain services within the selected model can be used by owners and family members Lower-cost -services purchased in the package of product are significantly cheaper than the purchase of individual products Modern –client operates with the Bank in a simple, modern and fast way using direct channels such as e-service ba-internet banking for citizens, services, m-ba-a mobile banking service for citizens and SMS services. Monthly fee-determined price of use of products and services is distributed evenly throughout the year Universal package account JES! Represents a new way of transparent operations with the Bank and its models are adapted to specific needs in different life periods and situations. JES! - Universal package is a product designed according to modern European standards and tailored to your needs. Use according to own preferences and needs. JES! account package is available in several different models - Optimum, Support, Student and Senior. As a user specified model is identified by a specially designed VISA Electron card, which is the primary card to your JES! Package - the account. JES user! Package includes all banking and non-bank products and services model that you selected. At the same time, their business with the Bank will perform in a modern way, using the advantages of new technology. Banking facilities 3 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo       e-banking, m-banking services Visa Classic Card MasterCard with a series of compensation standing order discount for approval of certain bank credit products Non-banking benefits   discounts in the shopping-service network of partner banks, services Mondial Assistance Center-home help in the territory of BiH, on the road, and medical and travel services JES! account package is available in several different models - Optimum, Support, Student and Senior. The complete contents of a particular model can be found in the tables below. It represents the unique sets of the services in which all banking services and products are combined into one single UniCredit banking product, JES! Package. It does not only include banking but also non-banking products, with lower total price than the single price of each product. The benefits that JES! Package brings include:      All banking products and services, together with non-banking facilities are combined into one single package with lower price than the single price of each product Variety of included products that can be according to the needs Total cost is equally distributed over monthly price of selected JES! Package Unique assistance at home and on the road within Bosnia and Herzegovina, as well as abroad, in cooperation with Monidal Assistance, and medical service Family members can use some of the facilities of the selected JES! Package JES! account package is available in several different models - Optimum, Support, Student and Senior Figure 1: JES! Models Source: UniCredit Bank Student JES! Package (Table 1) is offer intended for student population and shaped as a package of products. It is intended for both full time and part-time students, B&H citizens studying either in Bosnia and Herzegovina or abroad. Student package includes the following products and services which help to students to deal with financial matters on a 4 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo 24/7 basis. This package is tailored according to the student population needs as well as by price affordable for this population. Table 1: Student JES! Package JES! Student Banking Products and services included in package Non-banking products included into package Product Name Student Account Included in Model YES Maestro Card YES SMS YES Mobile Banking (m-ba) Standing Order 1,00 KM YES 24 PLUS savings -higher interest rates up to 24months YES Mondial assistance Services: Access to Mondial assistance network provider YES Assistance at home - services in B&H; Service of specials in emergency interventions up to 200 KM Visits of a doctor in the case of accident Visits of a nurse in the case of accident Home care after leaving hospital Information about medical facilities and services Information in the case of disability up to 150 KM up to 100 KM up to 100 KM YES YES Information about medicines and pharmacies Help on the road for passenger car Repairs on the spot or two vehicles Services Abroad YES Medical expenses coverage up to 2.000,00 EUR Medical transportation in B&H No Limit Transportation of the deceased in B&H up to 3.000,00 EUR Children Return Relatives transportation organisation and transport costs coverage up to 150 EUR Accommodation of relatives up to 150 EUR Legal Assistance up to 1.000 EUR Baggage Delay up to 20 EUR Information prior to travel YES Information about B&H agencies Abroad YES Information in the case of documents YES Emergency message YES Help on the road for passenger car Abroad Repairs on the spot or two vehicles up to 150 EUR Advantage of Better Quality of life with Mondial Assistance Services Student Model Monthly price of the Student JES! Package up to 300 KM 1,50 KM Source: UniCredit Bank dd Senior package (Figure 2) is made for the senior population with retirement income. According to the products and services included it is attractive to this customer category. It 5 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo provides SMS service, especially useful for this old age category. The product very interesting to those customers is included Visa Classic Card, with deferred payment. The price is determined according to the financial position of the seniors. Table 2: Senior JES! Package Senior Banking Products and services included in package Nonbanking products included into package Product Name Current Account Included in Model YES Maestro Card YES Visa Classic Card YES SMS YES Mobile Banking (m-ba) 1,00 KM Standing Order YES Allowed Limit up to 1.500,00 KM 24 PLUS savings -higher interest rates up to 24months Mondial assistance Services: Access to Mondial assistance network provider Assistance at home - services in B&H; YES Service of specials in emergency interventions Visits of a doctor in the case of accident Visits of a nurse in the case of accident Home care after leaving hospital Information about medical facilities and services Information in the case of disability up to 150 KM up to 150 KM up to 100 KM up to 65 KM YES YES Information about medicines and pharmacies Help on the road for passenger car Repairs on the spot or tow vehicles Services Abroad YES Medical transportation in B&H No Limits Information prior to travel YES Help on the road for passenger car Abroad Repairs on the spot or tow vehicles up to 150 EUR YES up to 250 KM Advantage Better Quality of life with Mondial Assistance Services of Expert Model Monthly price of the Senior JES! Package 3,00 KM Source: UniCredit Bank dd Optimum package, represented in Figure 3, is intended to satisfy the needs of majority of the clients by providing the services and products that they use often. Most of the users of this model are employed persons with middle income and for them the products included represents the way to afford themselves better possibilities and better quality of life. EBanking provides them opportunities to deal with its financial needs with less time for transaction and lower costs. Table 3: Optimum JES! Package 6 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Optimum Product Name Included in Model Banking Products and services included in package Current Account YES Maestro Card YES Visa Classic Card YES SMS YES Internet Banking ( e-ba) YES Mobile Banking (m-ba) For Optimum users - 1,50 KM Standing Order YES Allowed Limit up to 2.500,00 KM 24 PLUS savings -higher interest rates up to 24months Mondial assistance Services: Access to Mondial assistance network provider Assistance at home - services in B&H; Service of specials in emergency interventions Visits of a doctor in the case of accident Visits of a nurse in the case of accident Home care after leaving hospital YES Information about medical facilities and services Information in the case of disability YES YES Information about medicines and pharmacies Help on the road for passenger car YES Repairs on the spot or tow vehicles up to 300 KM Non banking products included into package YES up to 200 KM up to 150 KM up to 100 KM up to 100 KM Services Abroad Medical expenses coverage up to 2.000 EUR Medical transportation in B&H No Limit Medication Delivery in emergency case up to 3.000 EUR Transportation of the deceased in B&H Children Return organisation and transport costs coverage up to 150 EUR Relatives transportation up to 150 EUR Accommodation of relatives up to 1.000 EUR Information prior to travel YES Information about B&H agencies Abroad YES Information in the case of documents Help on the road for passenger car Abroad Repairs on the spot or tow vehicles YES Advantage of Visa Classic Card costs lower Optimum Model Monthly price of the Optimum JES! Package up to 150 EUR 6,00 KM Source: UniCredit Bank dd Expert package is tailored for smaller population of the customers with high income level and higher financial needs. This represents the widest set of the products offered by the bank with the intention to satisfy the large needs of the selected population. The products included and the price is set according to the preferences, and needs and customer profile. (Figure 4). Table 4: Expert JES! Package 7 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Expert Product Name Included in Model Banking Products and services included in package Current Account YES Maestro Card YES Visa Classic Card YES MasterCard Revolving YES SMS YES Internet Banking ( e-ba) YES Mobile Banking (m-ba) YES Standing Order YES Allowed Limit up to 5.000,00 KM Provision for mortgage and cash loans 30% Discount 24 PLUS savings -higher interest rates up to 24months Mondial assistance Sevices: YES Access to Mondial assistance network provider Assistance at home - services in B&H; YES Service of specials in emergency interventions Visits of a doctor in the case of accident up to 300 KM up to 200 KM Visits of a nurse in the case of accident up to 110 KM Medication Delivery in emergency case organization and delivery costs covered Home care after leaving hospital up to 60 KM Information about medical facilities and services Information in the case of disability YES YES Information about medicines and pharmacies Help on the road for passenger car Repairs on the spot or tow vehicles YES Organization of the substitute car YES AccomoYEStion up to 100 KM Continuation of the journey up to 300 KM Non banking producst included into package up to 200 KM up to 350 KM Services Abroad Medical expenses coverage up to 4.500 EUR Medical transportation in B&H No limit Medication Delivery in emergency case up to 30 EUR Transportation of the deceased in B&H up to 3.000,00 EUR Children Return Relatives transportation organidation and transport costs coverage up to 300 EUR Accomodation of relatives up to 300 EUR Information prior to travel YES Information about B&H agencies Abroad YES Information in the case of dotocuments YES Emergency message YES Continuation of the journey up to 150 EUR Baggage Delay- cost coverage up to 50 EUR Legal Assistance up to 1.200,00 EUR Help on the road for passenger car Abroad Repairs on the spot or tow vehicles up to 200 EUR 8 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Organization of the substitute car YES AccomoYEStion up to 85 EUR Continuation of the journey up to 150 EUR Advantage of Better Quality of life with Mondial Assistance Services Expert Model Monthly price of the Expert JES! Package 10,00 KM Source: UniCredit Bank dd Conclusion The aim of this study is to clarify the concept of the price discrimination and to show how this concept is used in banking business on the example of the UniCredit Bank dd Mostar. UniCredit Bank d.d. was the first bank in Bosnia and Herzegovina that introduced a new, unique approach to client service model. The basic characteristic of the whole business of the Bank was actually based on the segmentation of clients (existing and new-potential) with complex business lines. The business lines included meeting the needs of clients and facing in accordance with their capabilities and needs. Characteristics of the business model UniCredit Bank dd was the segmental approach to the client, so that the clusters of customers would fit similar characteristics, preferences and market position, and assign them a special service model defined by each business line. JES! account package is available in several different models - Optimum, Expert, Student and Senior. Account package is also practical, useful, stylish and affordable. This way of the price discrimination represents all three degree of price discrimination, as well as price discrimination done by bundling or Tie-In Sales .Besides banking products and services, the JES Package as an anchor product of the Bank also provides a range of non-banking services and facilities thereby enriching and facilitating the everyday lives and businesses of clients which so far have been recognized by over 100.000 satisfied users. It represents the unique sets of the services in which all banking services and products are combined into one single UniCredit banking product, JES! Package. It does not only include banking but also non-banking products, with lower total price than the single price of each product. Each of this model with the products included is specially designed for the certain and targeted clients. Based on this segmentation the price of the model is determined. The intention behind is that each customer pay his reservation price and that all consumer surplus is caught. References Perloff, J.M. (2009) Microeconomics, 5th Edition, Boston, USA, Pearson Education UniCredit Bank http://www.unicreditbank.ba/home/wps/wcm/connect/ucb_ba/utils/index/ Last Access 22nd April 2013 9 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1630 Title A name given to the resource Price Discrimination Approach on the Example of UniCredit Bank dd Mostar Author Author DRECA, Nađa Abstract A summary of the resource. The aim of this study is to clarify the concept of the price discrimination and to show how this concept is used in banking business on the example of the UniCredit Bank dd Mostar. Price discrimination refers to any no uniform pricing policy used by a firm with market power to maximize its profit. Price Discrimination leads to change in both, quantity and price. So it is also called no uniform pricing, charging customers different prices for the same product or charging the single customer a price that varies depending how many units the customer buys. There are 3 degrees of Price Discrimination. : 1st degree is different prices for both consumers and units, 2nd degree is different prices for different units and 3rd degree is different prices to different consumers. UniCredit Bank d.d. was the first bank in Bosnia and Herzegovina that introduced a new, unique approach to client service model. The basic characteristic of the whole business of the Bank was actually based on the segmentation of clients (existing and new-potential) with complex business lines. The business lines included meeting the needs of clients and facing in accordance with their capabilities and needs. Characteristics of the business model UniCredit Bank dd was the segmental approach to the client, so that the clusters of customers would fit similar characteristics, preferences and market position, and assign them a special service model defined by each business line. JES! Package account is present on the market since 2006 in the form of 4 different models adapted to the needs of the client and used by more than 50,000 customers. JES! account package is available in several different models - Optimum, Expert, Student and Senior. Account package is also practical, useful, stylish and affordable. Keywords: Price Discrimination, Different Customers, Profit, UniCredit Bank, Banking Products, client service model. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 978-9958-834-23-3 https://omeka.ibu.edu.ba/files/original/34f20181250708316234e74d697d1df5.docx d1b3a7b725c13a44c492498ecbf2ce85 https://omeka.ibu.edu.ba/files/original/e46ef0f91e5ecec715a077683ab09442.pdf f8731e9b40a7a03ccf31c273845cde42 PDF Text Text International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Vertical Integration on the Example of Agrokor Nađa Dreca International University of Sarajevo nadja_n88@hotmail.com Abstract This study will provide the explanation of the vertical integration, benefits and show the application of the vertical integration in the real business on the example of the Croatian company Agrokor. There are always important transactions between a multinational`s operations in different countries. The output of one subsidiary is often an input into the production of another. Or technology developed in one country may be used in others. Or management may usefully coordinate the activities of plants in several countries. Multinationals exist because it turns out to be more profitable to carry out these transactions within a firm rather than between firms. This means that multinationals engaged in internalization. If you want something done right, do it yourself. Many transactions are more profitably conducted within a firm rather than between firms. Also many activities in different countries may be usefully integrated in a single firm. One of example of vertical integrated firm in Balkan is Agrokor, Croatian company. In 1989 the joint-stock company Agrokor was registered. The Agrokor Group is the largest private company in Croatia and one of the leading regional companies Apart from the Croatian companies, the Agrokor Group today also comprises companies from all over the region acquired during the last few years: Ledo Čitluk, Sarajevski kiseljak, Velpro Sarajevo, Frikom, Dijamant, Idea, Ledo Hungary and Fonyodi. Keywords: Vertical Integration, Multinational Company, Production, Subsidiary, Profitability, Outside the firm price movements’ direct production, which is coordinated through a series of exchange transactions on the market? Within a firm, these market transactions are eliminated and in place of the complicated market structure with exchange transaction is substituted the entrepreneur-coordinator, who directs production. It is clear that these are alternative methods of coordinating production. Ronald Coase (1937) If you want something done right, do it yourself. He is a slave of the greatest slave, who serves nothing but himself. Introduction Today the uncertain business environment cause that many companies due to changes in the market are forced to introduce some changes its business and size of the company and corporation in order to gain higher profit, gain competitive advantage and establish stable operational environment within company. Those goals are mostly achieved throughout the process of vertical integration. In order to perform efficiently all production channels must 1 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo be integrated into single line, such as connection of purchase of inputs, production, business logistics, marketing and sale within own Retail Company. Vertical integration represents the growth of Retail Company which establishes connections with its supplier (upward) and consumers (downward) integration in order to improve its competiveness. There are always important transactions between a multinational`s operations in different countries. The output of one subsidiary is often an input into the production of another. Or technology developed in one country may be used in others. Or management may usefully coordinate the activities of plants in several countries. Multinationals exist because it turns out to be more profitable to carry out these transactions within a firm rather than between firms. This means that multinationals engaged in internalization. (Krugman and Obstfeld, 2009) Vertical Integration Characteristics Many transactions are more profitably conducted within a firm rather than between firms. Also many activities in different countries may be usefully integrated in a single firm. Vertical integration – is when a firm participates in more than one successive stage of value chain (supply/production/distribution chain).Only if a firm can perform most of the necessary production steps less expensively than if it relied on other firms does it vertically integrated. (Carlton and Perloff, 2005) First advantage of internalization is technology transfer. Transfer of knowledge or another form of technology may be easier within a single organization than through a market transaction between separate organizations. Second advantage of internalization is vertical integration. If one firm (the `upstream` firm) produces a good that is used as an input for another firm (the `downstream` firm) , many problems can result. They can engage in conflict regarding many things, weak cooperation, competition etc. These problems may be avoided or at least reduced if these firms are combined into a single `vertical integrated` firm. There are at least three possible costs of vertical integration. First, the cost of supplying its own factors of production or distributing its own product may be higher for a firm that vertically integrates than for one that depends on competitive markets, which serve these needs efficiently. Second, as a firm gets larger, the difficulty and cost of managing it increase. The advantage of dealing with a competitive market is that someone else supervises production. Third, the firm may face substantial legal fees to arrange to merge with another firm. Advantages of vertical integration 1. Internalization  To lower transactions costs – avoid opportunistic behavior  To control quality of products supplied  To enhance coordination – e.g. JIT delivery  To reduce uncertainty regarding prices, availability, etc. 2. Steady supply of key inputs 3. Correct market failure due to externalities by internalizing those externalities 4. Avoidance of government restrictions, regulations, taxes  Combining regulated utilities and unregulated service companies  Using transfer pricing for allocation of profits 5. Gain market power 2 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo  better exploit or to create market power 6. Eliminate market power  A victim of another firm`s market power may vertically integrate to eliminate that power. (Krugman and Obstfeld, 2009) Agrokor Example One of example of vertical integrated firm in Balkan is Agrokor, Croatian company. In 1989 the joint-stock company Agrokor was registered. By using vertical integration from agriculture to manufacture of end products, Agrokor provides the customers with a wide range of fresh, healthy domestic products. Furthermore, the proposed concentration will lead to a vertical integration of production, retail sale and wholesale, which will undoubtedly produce horizontal effects within the retail sale and wholesale. The Agrokor Group is the largest private company in Croatia and one of the leading regional companies with consolidated total revenues greater than HRK 29bn in 2011 and employing almost 40,000 people. (Agrokor) The Agrokor Group's core businesses are the production and distribution of food and drinks on the one hand and retail on the other, comprising among others Croatia's largest producers of mineral water - Jamnica d.d.; ice-cream - Ledo d.d.; oil, margarines and mayonnaise - Zvijezda d.d.; the largest Croatian meat industry - PIK Vrbovec d.d.; Belje, the largest agricultural and industrial capacity in Croatia and the leading retail chain Konzum d.d. Since it was established 30 years ago, due to a clear business vision, a consistently applied strategy and well-considered investments Agrokor has grown from a small family-owned company for the production and sale of flowers to become the leading food industry and retail group in the region today (Figure 1). Figure 1: Agrokor Business Production and storage of beans, soya and feed Chicken Meet production, meat and milk products Salt Production Production of Edible oil, Margarine and mayonnaise Ice Cream and Frozen Food Products Production of Water, Juices and Soft Drinks Wine Growing and Production Wholesale and Distribution Retail Other Business Source: Agrokor 3 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Apart from the Croatian companies, the Agrokor Group today also comprises companies from all over the region acquired during the last few years: Ledo Čitluk, Sarajevski kiseljak, Velpro Sarajevo, Frikom, Dijamant, Idea, Ledo Hungary and Fonyodi (Figure 2 and Figure 3). Figure 2: Agrokor Group Business Structure Source: Agrokor Agrofructus d.o.o. is the leading company in the area of South East Europe, specialized in production, purchase and sale of fruits and vegetables. Annually, they supply 200,000 tons of products, grown in Croatia, Macedonia, Bosnia and Herzegovina and Serbia to countries of western and Eastern Europe. With an annual turnover of over € 100 million it represents a vital part of the Agrokor concern. Agrokor trgovina d.d. has been operating as an independent company since 1996. The company's core business activity is trading in agricultural/food products. As part of the Agrokor Group, Agrokor trgovina participates in cooperation with other members of Agrokor, namely Belje d.d., PIK Vinkovci d.d., Vupik d.d. and Zvijezda d.d., in the production and processing of agricultural products. Agrolaguna d.d. has been part of Agrokor since the end of 2004. It belongs to the business segment engaged in the production of domestic high-quality products. Agrolaguna's business operations are divided in several production segments: vine-growing, olivegrowing, and stock-breeding and, to a lesser extent, vegetable-farming. All the company's products are regionally known for their quality and production tradition 4 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Agroprerada is engaged in desiccation and storing of cereals and oil crops, production of fodder, production, storing and packing of table apples. Since Agroprerada joined Agrokor its total turnover has linearly been increasing from year to year. The production of fodder is a dominating business activity of Agroprerada. PIK Vinkovci d.d. produces and sells agricultural products of plant and animal origin and owns the biggest silo capacities in the eastern part of Croatia, which is where the main part of Croatia's agricultural production is based. PIK Vrbovec is one of the largest Croatian meat processing industries with the 70 years old tradition in the production and processing of meat products. It has been a part of the Agrokor Corporation, its majority owner, since 2005. Sojara Zadar as the only producer in the region with processing units able to process soybean into soybean meal, raw soybean oil and lecithin has no significant competitors in either Central or Eastern Europe. The processing capacity is 1,000 tons of soybeans a day or 300,000 tons a year. Belje d.d., once the largest domestic agro-industrial conglomerate with the 300 years old tradition of food production, has been a part of the Agrokor Group since the beginning of 2005, which is the largest food producer in this part of Europe. Belje d.d. has been engaged in food production for over three centuries now, and it has been part of the Agrokor Concern, the largest food producer in this part of Europe, since 2005Food processing and agricultural production are the parts of Belje, divided into profit centres: production of smoked sausages and bacon, production of flour, vine production and bottling, production of dairy products, agriculture, seed growing, fodder factory, pig breeding, bullocks breeding and dairy cattle-raising. Jamnica d.d. is the largest mineral water producer in Croatia with a tradition of more than 175 years. Since 1999, apart from mineral waters Jamnica is also producing fruit juices under the Juicy brand, and in 2002 it launched Jana natural spring water and Juicy Fruits refreshing soft drinks. Jamnica d.d. comprises the Jamnica natural mineral water bottling plant in Pisarovina, the Jana spring water and non-alcoholic beverage bottling plant in Sveta Jana, the Juicy natural fruit juices bottling plant, the Sarajevski kiseljak natural mineral water and non-alcoholic beverage bottling plant in Bosnia and Herzegovina, the Fonyódi mineral water bottling plant in Hungary, and distribution companies in Slovenia, Serbia and the USA. In 2000 the first major step towards other regional markets was made - in Bosnia Herzegovina Jamnica became the majority shareholder of the natural mineral waters and soft drinks bottling plant Sarajevski Kiseljak, and in 2004 the Hungarian natural mineral water bottler Fonyodi was acquired. Since 1958 when Ledo produced the first industrial ice cream Snjeguljica in Croatia, the company has been synonym for top quality frozen products such as ice cream, deserts, pastry, fruits and vegetables, fish, and ready-to-serve meals. Except in Croatia Ledo is with a 79% share the market leader in Bosnia and Hercegowina, where it purchased the ice cream factory in Čitluk and established the company Čitluk d.o.o. at the beginning of 2000. Zvijezda is the largest producer of edible oils and a sole producer of margarines, vegetable fat and mayonnaise in Croatia, being the market leader in all its product groups. The level 5 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo of recognition of Zvijezda's brands Zvijezda and Margo is 95% according to the conducted surveys. The retail sales chain of Konzum is the leader on the Croatian market and the only one with more than 570 stores in all the counties of Croatia. Konzum d.d. is the leading retail chain in Croatia with over 700 stores in which more than 650,000 customers do their everyday shopping. Apart from its retail business, Konzum intensively develops its wholesale business as well. The company has 19 VELPRO wholesale centers. Besides being market leaders in Croatia, Konzum and Idea, Agrokor’s retail companies with total consolidated income from sales amounting to EUR 2.67 billion, make also the largest retail group in the Adria Region, according to a regional analysis of the retail sectors in Croatia, Serbia and Bosnia and Herzegovina carried out by Deloitte. Konzum has successfully developed the K plus brand program, enjoying the greatest popularity among the Croatian customers. Konzum’s brand offer is segmented into several subcategories, namely Standard, K plus and Volim najbolje, in order to respond to the wishes and needs of the customers best. Tisak, joint stock Company, is the largest newsstand retail chain with more than 1200 sales points. It is the leading Croatian distributor of press, tobacco products, prepaid vouchers and other merchandise that are delivered to more than 4600 sales points. mStart d.o.o. is a member of the Agrokor Group active since July 1, 2010 when the IT business was set up as a limited-liability company aimed at optimizing IT investments and upgrading the Agrokor Group’s IT functions (Agrokor). Figure 3: Agrokor Companies Source: Agrokor 6 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Some important dates for Agrokor 1995 - Opening of the first Super Konzum The Agrokor Group is registered 1999 - Introduction of the new brand Ledo riba (Ledo fish) 2000 - A new company was founded for the production of ice cream in Citluk, Bosnia and Herzegovina by the name of Ledo Citluk Agrokor owns a 97,4% share of Sarajevski kiseljak 2003 - Agrokor acquires 51% capital share of TP DC Sarajevo 2004 - The ice cream industry makes significant investments in newproduction and distribution capacities (Čitluk, Sarajevo, Belgrade, Zagreb, Maribor) First store in Bosnia and Hercegovina opened - VelPro Rajlovac 2005 - Konzum retail chain opened its first stores in Herzegovina 2007- Agrokor Group signed a Takeover Agreement for the retail and wholesale business of VF comerce and thus, besides Croatia, became food retail leader in Bosnia & Herzegovina Agrokor in Balkans Agrokor also owns some firms in other Balkan`s countries like: It is in Serbia Dijamant (Oil and oil products) and Frikom(ice- cream industry). Idea d.o.o. Beograd becomes member of Agrokor Group. Dijamant AD is the largest producer of edible oils and the leading producer of margarine, vegetable fat and delicacy products based on mayonnaise in Serbia. Beside mass consumption products, Dijamant also produces raw materials for other food industries, primarily the confectionery and bakery industries. Dijamant became part of Agrokor in mid-2005. Since then, significant improvements across all business segments have been made. Frikom AD, the leading and largest ice-cream manufacturer in Serbia, joined the Agrokor Group in 2003. This acquisition is of key strategic importance for Agrokor, because it added exceptional new value to the total Agrokor production of ice cream and frozen food, which will enable Agrokor positioning as the leading producer of this commodity group in the region. The full impact of changes that Agrokor strongly launched acquiring Frikom in 2003 was manifested in 2004, when already in the first seven months market share grew, consequently making Frikom the leading player in the ice cream market of Serbia The acquisition of Idea d.o.o. conducted in 2005 is a strategically important move for Agrokor since Idea has become the foundation for further development of Agrokor's retail business in the region. Today, Idea has more than 150 retail stores across Serbia and 7 wholesale centers in Belgrade, Niš, Leskovac, Čačak, Novi Sad and Subotica with more than 4,000 employees. In 2011, the company continued making new investments, mainly aimed at expanding the retail sales network in order to make Idea stores of various formats available to customers across Serbia. The process of optimizing the existing business processes and increasing productivity and quality of service in retail sales continued in 2011 as well. In Hungary Agrokor becomes owner of two Hungarian companies, the water filling plant Fonyodi and the ice-cream factory Baldauf (today Ledo kft. Hungary) 7 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Except in Croatia Ledo is the market leader in Bosnia and Hercegowina, where it purchased the ice cream factory in Čitluk and established the company Čitluk d.o.o. at the beginning of 2000. In 2004 Ledo additionally strengthened its regional leadership spreading its ice cream production into Hungary especially by acquisition of the Baldauf Company, Ledo Lft. Hungary today, which is the third largest ice cream producer in Hungary. Similar to other Agrokor companies Ledo plans to spread on the regional markets but also on the markets of the European Union. Sarajevski kiseljak d.d. is the leading company engaged in the production and sale of mineral water in Bosnia and Herzegovina with a 120-year-old tradition. New era for Sarajevski kiseljak d.d. symbolically started with 2000 when, through Jamnica, the Agrokor Group became the majority owner of the company and started making investments in its development. The company affirms its longtime leading position primarily thanks to the high and recognizable quality of its mineral water, continuous modernization and improvement of production and business processes as well as adjustment of the company's business policy to market demands and customer needs. Conclusion Today the uncertain business environment cause that many companies due to changes in the market are forced to introduce some changes its business and size of the company and corporation in order to gain higher profit, gain competitive advantage and establish stable operational environment within company. Those goals are mostly achieved throughout the process of vertical integration. In order to perform efficiently all production channels must be integrated into single line, such as connection of purchase of inputs, production, business logistics, marketing and sale within own Retail Company. Vertical integration represents the growth of Retail Company which establishes connections with its supplier (upward) and consumers (downward) integration in order to improve its competiveness. The advantages of integration include:     Higher level of product and services controlling in order to better satisfy the needs of targeted groups and market segments Elimination of risks in uncertain supply Better market differentiation Optimization and decrease of business costs The Agrokor Group is the largest private company in Croatia and one of the leading regional companies Apart from the Croatian companies, the Agrokor Group today also comprises companies from all over the region acquired during the last few years: Ledo Čitluk, Sarajevski kiseljak, Velpro Sarajevo, Frikom, Dijamant, Idea, Ledo Hungary and Fonyodi. Agrokor offers a superior service and pleasant shopping at reasonable prices through own network of modern and functionally equipped retail facilities. Why Agrokor does this?  To expand market (B&H, Serbia, Montenegro, Slovenia, Hungary etc.)  Specialized equipment or services may be needed for the industry, but are only supplied by other firms if the industry is large and concentrated.  Labor pooling: a large and concentrated industry may attract a pool of workers, reducing employee search and hiring costs for each firm.  Knowledge spillovers: workers from different firms may more easily share ideas that benefit each firm when a large and concentrated industry exists 8 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo References Agrokor http://www.agrokor.hr/en-GB/Naslovnica.html Carlton, D.W.& Perloff,J.M.(2005).Modern Industrial Organisation.Pearson 4th Edition Krugman,P.R. &Obstfeld,M.(2009).International Economics:Theory & Policy.Pearson 8th Edition 9 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1678 Title A name given to the resource Vertical Integration on the Example of Agrokor Author Author DRECA, Nađa Abstract A summary of the resource. This study will provide the explanation of the vertical integration, benefits and show the application of the vertical integration in the real business on the example of the Croatian company Agrokor. There are always important transactions between a multinational`s operations in different countries. The output of one subsidiary is often an input into the production of another. Or technology developed in one country may be used in others. Or management may usefully coordinate the activities of plants in several countries. Multinationals exist because it turns out to be more profitable to carry out these transactions within a firm rather than between firms. This means that multinationals engaged in internalization. If you want something done right, do it yourself. Many transactions are more profitably conducted within a firm rather than between firms. Also many activities in different countries may be usefully integrated in a single firm. One of example of vertical integrated firm in Balkan is Agrokor, Croatian company. In 1989 the joint-stock company Agrokor was registered. The Agrokor Group is the largest private company in Croatia and one of the leading regional companies Apart from the Croatian companies, the Agrokor Group today also comprises companies from all over the region acquired during the last few years: Ledo Čitluk, Sarajevski kiseljak, Velpro Sarajevo, Frikom, Dijamant, Idea, Ledo Hungary and Fonyodi. From this example it is seen that vertical integrated firms benefits to all participants in the process of production and performing business. Keywords: Vertical Integration, Multinational Company, Production, Subsidiary, Profitability. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 978-9958-834-23-3 https://omeka.ibu.edu.ba/files/original/f5cf59653ba7f23efcac9019335795f5.pdf 32eba554cff1ffc1da8d18f7dffbeab5 PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo Fragility of Emerging Stock Markets; a Comparison between B&H, Croatia and Serbia Adnan Duric International Burch University, Sarajevo, Bosnia and Herzegovina duric_adnan@hotmail.com Uğur Ergun International Burch University, Sarajevo, Bosnia and Herzegovina uergun@ibu.edu.ba This study investigates the how emerging stock markets respond to external and internal shocks. Daily stock market data from three southeast emerging European countries are used. GARCH (1, 1) model is employed. Daily stock markets indices are obtained from the selected stock markets and data stream for the period January 2000 to December 2011. Augmented Dicky Fuller unit root test and co-integration test are used to gauge out linkages between stock markets. The results of the study can be the useful resource for future research. Keywords: Fragility, Emerging Stock Markets in Bosnia, Croatia, Serbia. 7 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1460 Title A name given to the resource Fragility of Emerging Stock Markets; a Comparison between B&H, Croatia and Serbia Author Author DURIC, Adnan ERGÜN, Uğur Abstract A summary of the resource. This study investigates the how emerging stock markets respond to external and internal shocks. Daily stock market data from three southeast emerging European countries are used. GARCH (1, 1) model is employed. Daily stock markets indices are obtained from the selected stock markets and data stream for the period January 2000 to December 2011. Augmented Dicky Fuller unit root test and co-integration test are used to gauge out linkages between stock markets. The results of the study can be the useful resource for future research. Keywords: Fragility, Emerging Stock Markets in Bosnia, Croatia, Serbia. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-4564 https://omeka.ibu.edu.ba/files/original/94d891fe63bcb145924616b09b31a983.pdf 1728c70dcf2ee734196724627dc216e0 PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo Correlation of Change in Fundamental Indicators and Stock Price Movements on Sarajevo Stock Exchange Enis Dzanic University of Bihac, Bosnia and Herzegovina enis.dzanic@bih.net.ba Fundamental analysis is regarded as one of the key tools in evaluating securities by examining intrinsic value of the business, trough primarily the analysis of its financial statements. Although in the short run, various factors might influence investment sentiment and thus stock price movements, in the long run fundamentals should determine stock price performance. Sarajevo Stock Exchange is a pioneering enterprise in the development of a capital market in Bosnian transition economy. Upon examining stock price movements and trade volumes over its ten year history, it is difficult to argue that high volatility in both factors can be attributed to changes in corporate fundamentals. We can thus argue that irrational or speculative determinants are at play; a discouraging prospect for a developing capital market. In order to investigate the correlation between the change in fundamental indicators and stock price movements, ten major companies listed on the exchange were selected using pre-defined criteria, and key fundamental indicators, as well as stock price volatility was examined for a five year period during which Sarajevo Stock Exchange had highest trade volumes. The results indicate that ratios that are price-independent have volatility ten times lower than ratios that are price-determined. Additionally, stock price analysis indicates high standard deviation; a traditionally accepted measure of volatility and intrayear stock price spreads often reach hundreds of percent. Furthermore, when selected indicators are correlated with stock price movements, the research determined that correlation coefficients are low, sometimes negative, suggesting no linear relationship between the change in fundamental indicators and the change in the price of the security. The result of high-risk high-volatility market situation was a significant decline in value of securities listed on the exchange. This decline led to a loss of confidence of individual investors in the exchange which can be illustrated by low trading volumes in the last few years, usually in the region of 1% to 3% of 2007 levels. The exchange thus is incapable of serving most of functions traditionally associated with the business. Keywords: Stock Price Volatility, Fundamental Analysis, Sarajevo Stock Exchange. 101 � https://omeka.ibu.edu.ba/files/original/25dec529bce68d83cbf2a4c8ff005d54.docx 331b359c8b86a59e15773f92f8bf300c https://omeka.ibu.edu.ba/files/original/8d28e06a6bbe074a38b64c5c545fd54a.pdf 7a2032150164b93e47e8c1071188d54a PDF Text Text International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo Correlation of Change in FundamentalIndicators and Stock Price Movements on Sarajevo Stock Exchange EnisDzanic University of Bihac, Bosnia and Herzegovina enis.dzanic@bih.net.ba Abstract Fundamental analysis is regarded as one of the key tools in evaluating securities by examining intrinsic value of the business, trough primarily the analysis of its financial statements. Although in the short run, various factors might influence investment sentiment and thus stock price movements, in the long run fundamentals should determine stock price performance. Sarajevo Stock Exchange is a pioneering enterprise in the development of a capital market in Bosnian transition economy. Upon examining stock price movements and trade volumes over its ten year history, it is difficult to argue that high volatility in both factors can be attributed to changes in corporate fundamentals. We can thus argue that irrational or speculative determinants are at play; a discouraging prospect for a developing capital market. In order to investigate the correlation between the change in fundamental indicators and stock price movements, ten major companies listed on the exchange were selected using pre-defined criteria, and key fundamental indicators, as well as stock price volatility was examined for a five year period during which Sarajevo Stock Exchange had highest trade volumes. The results indicate that ratios that are price-independent have volatility ten times lower than ratios that are price-determined. Additionally, stock price analysis indicates high standard deviation; a traditionally accepted measure of volatility and intra-year stock price spreads often reach hundreds of percent. Furthermore, when selected indicators are correlated with stock price movements, the research determined that correlation coefficients are low, sometimes negative, suggesting no linear relationship between the change in fundamental indicators and the change in the price of the security. The result of high-risk high-volatility market situation was a significant decline in value of securities listed on the exchange. This decline led to a loss of confidence of individual investors in the exchange which can be illustrated by low trading volumes in the last few years, usually in the region of 1% to 3% of 2007 levels. The exchange thus is incapable of serving most of functions traditionally associated with the business. Keywords: Stock Price Volatility, Fundamental Analysis, Sarajevo Stock Exchange. Introduction Analysis of financial statements using fundamental analysis helps us determine intrinsic value of the business, and help us determine the value of stocks issued by publicly traded companies. In the short run, there might be a number of factors that influence supply and demand for a particular stock, however in the long run; fundamental indicators are a primary determinant of a market capitalization of a business, and thus its share price. Thus, some authors like Banz (1981) or Fama (1970) suggest that companies with low P/BV ratio (price to book value) achieved significantly better results compared to companies with high P/BV ratio. Their research indicates that companies in the bottom tenth of the P/BV ratios have outperformed on average by one percent per month in terms of stock price change, 180 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo companies that were in the top ten percentile of value of P/BV ratios. One explanation for this situation is that companies with high P/BV ratio were overpriced and thus provided little return on investment. Some research (Michaely et al., 1995) shows that although initial market reaction is slow, the market does react significantly to the company's earnings information as represented by some fundamental indicators such as EPS (earnings per share). Other authors have demonstrated that the use of fundamental analysis can be used to determine stock price movement in the future, and thus achieve extraordinary returns, significantly higher than market average. Thus Ou and Penman (1989) used multivariate analysis of financial ratios; and by using statistical tools derived a composite indicator that predicts a change in the company's earnings and thus the movement of its stock. Other authors reached similar conclusions (Lev and Thiagarajan, 1993), while Abarbanell and Bushy (1998) as well as Piotrski (2000) successfully determined which companies will have above average stock returns as well as those that will underperform the market, by using financial statements and fundamental indicators. The purpose of this paper is to examine whether stock price of companies quoted on Sarajevo Stock Exchange is truly determined by the performance of the issuers, or we have other stock price determinants, such as speculative trading, being the driving force behind the change in value of securities. This is a critical issue to examine since small and relatively new exchanges such as Sarajevo Stock Exchange (SASE), are particularly vulnerable, and in a country with underdeveloped investor protection mechanisms and infrastructure, might lead to a loss of confidence in capital markets, thus perverting the purpose of those markets in a first place and reducing them to a forum for secondary exchange of securities. Events after 2007 peaks on Sarajevo Stock Exchange, and in particular its low trading volume, suggest that this might be taking place at the time. Methodology In order to determine whether the performance of a business is reflected in the stock price change on Sarajevo Stock Exchange we will analyze financial reports of selected companies, determine fundamental indicators, and examine if there is a correlation between a change in fundamental indicators and corresponding share price traded on SASE. The following selection criteria were used to select 10 companies examined in this paper: corporate shares were traded during the entire period examined in the paper, that is from 2003 to 2008; during this period, shares were traded during at least 250 trading days; at least 10% of the total shared issued by the company changed owners during that period, excluding the initial registration of shares; the company was listed in year 2002; market capitalization is over KM 30,000,000.00 in 2008; the companies were registered at least five years prior to being listed on SASE. Using the above mentioned criteria, I selected the following 10 companies for the research sample: Bosnalijekdd, BH Telecom dd, Hidrogradnjadd, ElektroprivredaBiHdd, Elektroprivreda HZ HB dd, Klasdd, Vranicadd, Vispakdd, Šipad Commerce ddand BihaćkaPivovara dd. The selected companies are the leaders in their industry sector in Bosnia, significantly exceed the selection criteria, are well known and established in the region in various industries such as construction, telecommunications, food industry, timber industry and the energy sector. 181 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo Fundamental indicators will be calculated, for a period from 2003 to 2008, as well as their mean, standard deviation and percentage deviation. The indicators will be divided in two groups, those that are share price independent and those that are share price dependent. The first group of ratios consists of ROE (return on equity), ROA (return on assets), BVPS (book value per share), EPS (Earnings per share) as well as asset (ATO) and equity turnover (ETO) ratios. The second group of indicators consists of MkCap (market capitalisation in absolute terms), P/Bv (price over book value, P/S (price over sales) and P/E (price over earnings) ratios. This will enable us to have a set of ratios whose percentage deviation should be correlated between two sets, if share price change is correlated with fundamental indicator change, that is with the corporate performance. The indicators will be indexed, with year 2003 being a base year with index 1. The next step is to calculate correlation index between a set of indicators and stock price change, in order to determine if there is a linear relationship between the change in fundamental indicators and share price change: High correlation index would suggest causal relationship between the stock price change and a change in fundamental ratios, which represent corporate performance. Results Since this analysis has generated a significant amount of data, which would consume significant amount of space, only relevant derived data will be presented. 182 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo P dependent P independent P dependent P independent P dependent P independent P dependent P independent Table 1: Indices of price dependent and price independent ratio change in a period of 2003-2008, with 2003 being a base year, for selected publicly traded companies on SASE ROE ROA BVPS EPS ETO ATO MkCa p Bosnalijekd.d. StDev Mean 0.088 0.953 0.106 0.831 0.165 1.234 0.136 1.170 0.060 1.067 0.081 0.930 % Dev 9.29% 12.73% 13.33% 11.65% 5.58% 8.73% BH Telecom d.d. StDev Mean 0.087 0.962 0.076 0.898 0.084 1.139 0.071 1.091 0.043 0.951 0.065 0.889 % Dev 9.00% 8.51% 7.36% 6.54% 4.57% 7.33% Vispakd.d. StDev Mean 0.784 -0.110 0.732 -0.082 0.020 0.979 0.769 -0.101 0.117 1.080 0.040 0.972 % Dev -712.52% -895.41% 1.99% -759.15% 10.80% 4.16% 3.030 4.692 64.59% 1.476 2.781 53.09% 2.107 3.420 61.62% P/Bv 1.996 3.443 57.96% 1.199 2.396 50.03% 2.210 3.519 62.82% P/S 1.937 3.231 59.94% 1.267 2.537 49.96% 1.817 3.194 56.88% P/E 2.320 3.717 62.41% 1.370 2.550 53.74% 23.269 15.642 148.76% ROE ROA BVPS EPS ETO ATO MkCa p JP ElektroprivredaBiHd.d. 0.896 -0.275 -326.05% 0.863 -0.274 -315.50% 0.049 0.924 5.33% 0.841 -0.283 -296.53% 0.317 1.374 23.04% 0.300 1.348 22.26% Elektorprivreda HZHB d.d. 0.629 -0.497 -126.65% 0.640 -0.514 -124.55% 0.253 1.236 20.50% 0.760 -0.627 -121.23% 0.227 1.227 18.49% 0.199 1.227 16.23% SipadKomercd.d. 62.823 -25.282 55.505 -22.079 93.295 86.254 49.764 -18.475 0.545 0.444 0.503 0.506 -248.49% -251.40% 108.16% -269.35% 122.61% 99.51% 1.540 2.174 70.84% 2.664 3.351 79.50% 6.249 5.843 106.94% P/Bv 1.812 2.424 74.75% 2.161 2.709 79.78% 1.070 0.864 123.82% P/S 1.102 1.684 65.47% 1.540 2.149 71.64% 6.131 6.874 89.19% P/E 15.053 8.494 177.22% 12.064 -1.752 -688.58% 2.813 2.740 102.65% Hidrogradnjad.d. 1.394 -0.343 2.195 -0.731 0.006 0.991 1.377 -0.337 0.192 0.695 0.240 0.945 -406.50% -300.36% 0.58% -409.14% 27.59% 25.43% BihackaPivovarad.d. 0.492 1.376 35.79% 0.597 1.449 41.19% 0.192 1.257 15.27% 0.773 1.752 44.11% 0.094 1.095 8.55% 0.099 1.140 8.71% Vranicad.d. 29.729 -10.014 41.478 -13.905 1.047 1.942 73.219 -26.027 0.423 0.785 0.313 0.962 -296.88% -298.30% 53.92% -281.32% 53.88% 32.50% ROE ROA BVPS EPS ETO ATO MkCa p 2.184 2.870 76.09% 0.977 2.212 44.19% 10.569 8.457 124.97% P/Bv 2.212 2.901 76.24% 0.552 1.703 32.40% 3.243 3.316 97.78% P/S 4.545 5.006 90.79% 0.592 1.576 37.60% 8.831 7.062 125.05% P/E 9.394 7.546 124.49% 0.507 1.310 38.71% 1.358 1.141 119.05% Klasd.d. 0.409 0.404 0.025 0.418 0.113 0.103 0.486 0.448 1.020 0.497 1.091 0.927 84.09% 90.29% 2.46% 84.08% 10.38% 11.13% ROE ROA BVPS EPS ETO ATO MkCa p 0.839 1.900 44.17% P/Bv 0.785 1.854 42.36% P/S 0.681 1.696 40.17% P/E 7.215 7.992 90.28% 183 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo Correl Net income 0.552 ATO -0.604 ROE -0.493 ROA -0.774 Net income ATO ROE 0.072 -0.311 -0.517 ROA Net income ATO ROE ROA 0.426 Net income ATO ROE -0.428 0.466 -0.408 ROA -0.414 Net income 0.254 ATO -0.684 ROE 0.255 ROA 0.297 BihackaPivovarad. d. Correl Net income 0.474 ATO -0.132 ROE 0.254 ROA 0.266 Net income ATO ROE -0.363 -0.319 -0.380 -0.653 ROA -0.445 0.434 0.325 0.419 Vranicad.d. Ratio Net income ATO ROE -0.226 -0.552 -0.248 ROA -0.230 Net income ATO ROE -0.332 0.201 -0.326 ROA -0.348 Net income 0.296 ATO -0.696 ROE 0.284 ROA 0.283 Klasd.d. Ratio SipadKomercd Vispakd.d. .d. JP JP Hidrogradnja BH Telecom Elektroprivred Elektroprivred d. d. d.d. a HZHB d.d. aBiHd.d. Bosnalijekd.d. Table 2: Correlation between selected fundamental indicators and stock price change for a period of 2003-2008 Discussion In the observed time period, six out of ten companies observed in this study, suffered net loss for the period of 2003-2008, which was covered by the reduction in the capital. Yet at the same time corporate share prices have risen dramatically, with mean value for the period ranging between 190% of the index year mean price (year 2003) up to 846% for a company Vranicad.d., as an example. Other companies enjoyed similar growth in share value, and the growth was most notable in 2005 – 2007 period, despite poor and declining fundamentals. Only BihackaPivovarad.d. demonstrated same level of change of price dependent vs. price independent ratios; in the case of this company, corporate performance parameters grew proportionally to the share price, and this is a rare case of share price growth substantiated by the growth in corporate intrinsic value. Volatility of the market at the time was very high. Previous research by author (Dzanic et al., 2010) indicated that volatility of SASE index SASX-10 was about ten times larger than Dow Jones Industrial Average. At the same time, correlation between those two indices was -0.38474, and SASE-10 index grew by 57% in the first half of the year. This is an indication of relative independence of SASE from major capital markets, when those markets are relatively stable. With the onset of 2007 recession, volatility increased in the United States, and capital markets started to mount losses. In 2007-2008 and with increasing volatility and losses in the US capital markets, SASE quoted shares started to lose value, especially in 2008. During that year, correlation between SASE and NYSE indices was 0.84775 in sharp contrast to 2005, which is an indication of a crisis spillover effect, as demonstrated by other authors(Longin and Solnik 2001), in other emerging markets (King and Wadhwani 1990). 184 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo In terms of correlation of share price with fundamental indicators, seven out of ten companies had correlation coefficient for net income in a range less than 0.4, indicating no linear relationship between share price movement and change in corporate earnings. One company even had a strong negative correlation coefficient for net earnings (Elekroprivreda HZHB) indicating that as earnings dropped over the period, and the company netted a loss, share price war growing. The results of the research suggest that fundamental indicators are not a driving force behind a change in share price of companies quoted on SASE, as demonstrated in seven out of ten companies examined in this study. Only one company had magnitude of change of fundamental indicators correlated to share price performance, while the other two demonstrated direction, and not necessarily the magnitude. Conclusion The research determined that fundamentals do not determine share price in the examined period. We can thus argue that irrational or speculative determinants are at play; a discouraging prospect for a developing capital market. The result of high-risk highvolatility market situation was a significant decline in value of securities listed on the exchange. This decline led to a loss of confidence of individual investors in the exchange which can be illustrated by low trading volumes in the last few years, usually in the region of 1% to 3% of 2007 levels. The exchange thus is incapable of serving most of functions traditionally associated with the business. In order to discourage speculative activities, authorities must learn to cope with the problem and legislation as well as oversight has to be improved, if confidence is to return to the Sarajevo Stock Exchange, together with the lost trading volumes. References Abarbanell, J. &Bushee, B.(1998). Abnormal returns to a fundamental analysis strategy. The Accounting Review73, 19-45 Banz, R.(1981). The relationship between return and market value of common stocks.Journal of Financial Economics 9, 3-18 Džanić E., Grozdanić E., Đug D. SvjetskaberzanskakretanjakaodeterminantakretanjanaSarajevskojberzi. PerspektiveekonomskograzvojaBiH (2010) Fama, E. F. (1970) Efficient capital market:A review of theory and emprical work. Journal of finance 25, No. 2. King M. A. &Wadhwani, S. (1990) Transmission of volatility between stock markets. The Review of Financial Studies 3/1, Lev, B. &Thiagarajan, R.(1993). Fundamental information analysis.Journal of Accounting Research 31, 190-215 185 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo Longin, F. M. &Solnik B.(2001) Extreme correlations of international equity markets during extremely volatile periods. Journal of Finance 56, Michaely, R., Thaler, R., Womack, K. (1995) Price reactions to dividend initiations and omissions: overreaction or drift. Journal of Finance 50, 997-997 Ou, J., Penman, S.(1989) Financial statement analysis and the prediction of stock returns. Journal of Accounting & Economics 11, 295-329 Piotroski, J. (2000) Value investing: The use of historical financial statement information to separate winners from losers.Journal of Accounting Research 186 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1512 Title A name given to the resource Correlation of Change in Fundamental Indicators and Stock Price Movements on Sarajevo Stock Exchange Author Author DŽANIĆ, Enis Abstract A summary of the resource. Fundamental analysis is regarded as one of the key tools in evaluating securities by examining intrinsic value of the business, trough primarily the analysis of its financial statements. Although in the short run, various factors might influence investment sentiment and thus stock price movements, in the long run fundamentals should determine stock price performance. Sarajevo Stock Exchange is a pioneering enterprise in the development of a capital market in Bosnian transition economy. Upon examining stock price movements and trade volumes over its ten year history, it is difficult to argue that high volatility in both factors can be attributed to changes in corporate fundamentals. We can thus argue that irrational or speculative determinants are at play; a discouraging prospect for a developing capital market. In order to investigate the correlation between the change in fundamental indicators and stock price movements, ten major companies listed on the exchange were selected using pre-defined criteria, and key fundamental indicators, as well as stock price volatility was examined for a five year period during which Sarajevo Stock Exchange had highest trade volumes. The results indicate that ratios that are price-independent have volatility ten times lower than ratios that are price-determined. Additionally, stock price analysis indicates high standard deviation; a traditionally accepted measure of volatility and intrayear stock price spreads often reach hundreds of percent. Furthermore, when selected indicators are correlated with stock price movements, the research determined that correlation coefficients are low, sometimes negative, suggesting no linear relationship between the change in fundamental indicators and the change in the price of the security. The result of high-risk high-volatility market situation was a significant decline in value of securities listed on the exchange. This decline led to a loss of confidence of individual investors in the exchange which can be illustrated by low trading volumes in the last few years, usually in the region of 1% to 3% of 2007 levels. The exchange thus is incapable of serving most of functions traditionally associated with the business. Keywords: Stock Price Volatility, Fundamental Analysis, Sarajevo Stock Exchange. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 978-9958-834-23-3 https://omeka.ibu.edu.ba/files/original/de33e2093aa5674ad93725da831de728.pdf acfb1c9a9cbdc76c4ad1ba77f9660638 PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo How to Overcome the Crisis in Relations between the European Union and Turkey Haydar Efe Kafkas University, Kars, Turkey efehaydar@gmail.com There has been a slowdown in the accession negotiations due to the blockage of negotiations chapters since 2006. EU affairs have lost their past lure in Turkey. And, Turkey decided to freeze its relations with the Presidency of the Council of the EU during the second half of 2012 and not to attend meetings chaired by the Cyprus EU Presidency. But despite these negative developments, the enhanced political dialogue between the EU and Turkey has continued. In this framework, the European Union has proposed a new positive agenda in order to enhance Turkey-EU relations and promote reforms in Turkey. The aim of this process is to keep the accession process of Turkey alive and bring a new momentum into TurkeyEU relations. In addition to, the new government in France gives signals it could reconsider its position with regard to the negotiation chapters that had blocked in 2007. Therefore, at present, serious efforts are needed to revive the negotiation process with a new impetus. Keywords: international relations, the European Union 155 � https://omeka.ibu.edu.ba/files/original/e777142c3a89f1309c5cc61edfb245ca.docx 0abd3909a39155fa05ec57c8cdbc4d7f https://omeka.ibu.edu.ba/files/original/9feaa234826324b1cbd85a034bba50a9.pdf 7e7008ad39e13bb0eef21247229cb0ff PDF Text Text International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo How to Overcome the Crisis in Relations between the European Union and Turkey Haydar Efe Kafkas University, Kars, Turkey efehaydar@gmail.com Abstract There has been a slowdown in the accession negotiations due to the blockage of negotiations chapters by the European Council since 2006. EU bid have lost its past lure in Turkey. And, Turkey decided to freeze its relations with the Presidency of the Council of the EU during the second half of 2012 and not to attend meetings chaired by the Southern Cyprus EU Presidency. But this problem is not sole problem between Turkey and the EU, there are many problems especially relating to the Customs Union. Although, the Customs Union makes significant contributions to the Turkish economy, but it has causes many problems in the EUTurkey relations. Main purpose of this study was to demonstrate the problems within the scope of the EU-Turkey Customs Union and to propose solutions to these problems. Despite these negative developments, the enhanced political dialogue between the EU and Turkey has continued. In this framework,the European Union hasinitialized a new positive agenda in order to enhance Turkey-EU relations and promote reforms in Turkey. The aim of this process is to keep the accession process of Turkey alive and bring a new momentum into Turkey-EU relations. But, at present, serious efforts are needed to revive the negotiation process with a new impetus and overcome many problems between Turkey and the EU which are faced. Keywords: Turkey-EU relations, accession negotiations, European Union, Customs Union Introduction Turkey‘s relations with the EU/EC started in 1959. This year is the 50th year of Turkey‘s signing Ankara Agreement with the Union. Since then Turkey has carried out many reforms, raised the standards of its democracy, despite the shortfalls and fulfilled the Copenhagen criteria. Indeed, Turkey‘s goal of the EU membership provides an incentive to undertake comprehensive reforms in Turkey. In this context, advances in the fields of democracy and human rights in Turkey are closely related to its EU accession process. Turkey‘s accession process has contributed to overall improvement of democratic standards of Turkey. Turkey share same values and principles such as democracy, human rights and free market. With the strong economic potential and important geostrategic location Turkey is an indispensable country for the EU. But, it is difficult to say that there is a common vision and integrated approach about the enlargement of the European Union. Also, the European Union is not only going through a serious crisis but also is an enlargement fatigue. Currently, Turkey‘s EU accession negotiations have been restrained by the Cyprus issue. But this reason is apparentreason; real reason is a lack of consensus among members of the European Union. In this context, there is not a consensus about Turkey‘s EU membership. They are divided regarding on whether Turkey belongs to Europe. Italy, Spain, United 1 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Kingdom and Sweden support Turkey‘s membership. On the other hand, Germany, Sarkozy‘s France and Austria oppose Turkey‘s EU membership. Because, with a population of seventy five million will be greater representation in the EU institutions than many big countries such as France, United Kingdom and Spain. Sarkozy and Merkel are opponent of Turkey‘s full membership and they propose ―privilegedmembership‖ i.e. partnership but not full membership. They see the EU as a Christian club and see Turkey as all Middle Eastern. France‘s former president Nicolas Sarkozy has proposed that Turkey be included in the creation of a ―Mediterranean Union‖ but not part of the EU. At the same time, Turkey has strengthened its economy, nowadays it is a sixth largest economy in Europe. But, liberalization and rapid progress in Turkish economy are also closely related in Turkey‘s EU bid. Turkish accession process and the Customs Union have also contributed to the economic development of Turkey and have positively affected Turkish economy. Besides, especially, the Customs Union has also contributed the reinforcement of Turkish industry. In recent decade, Customs Union has given the competitiveness to Turkish economy in the competition with the rival countries. But, many problems in Turkey-EU relations within the scope of Customs Union also originate due to the lack of an integrated approach in the EU. Currently, these problems affect Turkish economy negatively therefore they must be solved. Firstly, CustomsUnion must be based on four freedoms: Free movement of goods; freedom of movement for workers; freedom of provide services and free movement of capital. But, Turkey- EU Customs Union does not cover agriculture, services and public procurement. Turkish workers could not circulate freely in the EU. More importantly, nonexistence of the free circulation of Turkish businesspersons in Europe is a big problem. Besides, according to Customs Union Agreement, Turkey has to accept all decisions of the European Union in other words, it has no right to reject these decisions because Turkey is not a member state of the EU; therefore, it does not have a vote in the EU‘s decision making mechanism. For example, Turkey has to accept all acquits related to Customs Union and decisions of the Courth of Justice of the European Union that there is not any judge from Turkey. Furthermore, Turkey has to accept the EU‘s Free Trade Agreements signed with third countries. The EU does not include Turkey to EU‘s FTA‘s signed with third countries. But, these countries do not want to sign FTA‘s with Turkey. Besides, the EU authorities conducted anti-dumping investigating to Turkish exporters. Another important problem is a transport quota which constitutes barriers to Turkish export goods. These afore mentioned problems and others which we are faced are serious and they must be solved immediately. The Problems within the Scope of the Customs Union between Turkey and the EU Although, the Customs Union makes significant contributions to the Turkish economy and has contributed to the reinforcement of Turkish industry which is capable of competing in global markets? Thanks to the Customs Union, open economy principle has become Turkey‘s economic model. Currently, the EU is Turkey‘s first import and export partner, on the other hand, Turkey ranks 7th in the EU‘s import and 5th in the export markets. Turkey‘s export to the EU are mostly manufactured goods, machinery and transport equipment. Currently, there are many important problems which originated from the Turkey-EU Customs Union. Customs Union is based on Association Agreement also known as Ankara Agreement between Turkey and the EU. Ankara Agreement was signed on 12 September 1963 in Ankara and came into effect 1 December 1964. Since then Turkey has been an associate member of the European Union. In Ankara Agreement, article 2 said that “A Custom Union shall be progressively established” in order toattain the objectives of the Ankara Agreement. Also, Association 2 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo shall comprise a predatory stage; a transitional stage (in these two stage the EU/EC has already eliminated tariffs on Turkish industrial products) and a final stage. “Final stage shall be based on the customs union and shall entail closer coordination of the economic policies of the Contracting Parties” (Ankara Agreement, 2013). After, in November 1970, in order to initialize the second stage (transitional stage) an Additional Protocol was signed and it came into effect 1 January 1973. Its aim was establish a timetable for abolition of tariffs and quotas on Turkish industrial goods traded between Turkey and the EU/EC. After end of the transitional stage which lasted 22 years, since on 1.1.1996, the completion of Customs Union Agreement between Turkey and the European Union, final stage which was planned in Ankara Agreement, began. It is a milestone in Turkey-EU relations and integration of the Turkish economy with EU. Turkey agreed to implement Common Customs Tariff (CCT) which applies to the import of goods across the external borders of the EU. Import and export duties and charges having equivalent affectwholly abolishedbetween the Community and Turkey on date of entry into force of this decision. The Community and Turkey agreed to introduce no new customs duties on imports and exports or any chargeshaving effect from that date (Article 4). More over quantitative restrictions on imports and export and all measures havingequivalent effect shall be prohibited between the Community and Turkey (article 5 and 6). (Decision No 1/95 The EC-Turkey Association Council, www.avrupa.info.tr , 2013) Customs Union Agreement was planned and presented by the EU on a large scale and Turkey signed this agreement without negotiating advantage and disadvantages carefully. But, it contained many liabilities for Turkey than classic Customs Union agreement. Turkey is a sole country in the Customs Union with the EU without being a member of the EU. For this reason, Turkey cannot attend decision mechanisms of the European Union. Besides, Customs Union Agreement gave Turkey many liabilities. In this context, Turkey shall align its commercial policy with the EU‘s common commercial policy and has to carry out to the EU‘s Common Trade Policy completely and it also has to adopt every decision of the European Union in the field of Common Trade Policy. Member states of the EU couldn‘t negotiate trade agreements with third countries by itself. Therefore, the European Commission negotiates Free Trade Agreements with many third countries on behalf of the EU. ―Turkey also accepted the EU‘s trade regime as it was, and was not able to persuade the EU to include a clause that would force the EU to consult with Turkey before signing FTA‘s with third countries. The EU negotiated andsigned FTA‘s with third countries without any involvement of Turkey‖ (Yılmaz, 2011: 242). For this reason, although Turkey has successfully implemented the EU-Turkey Customs Union more than 17 years, there are many problems related to Customs Union. Currently, most serious problem between Turkey and the European Union in the field of Customs Union is non-inclusion of Turkey to the EU‘s Free Trade Agreements. The EU‘s negotiations with Canada, India, Malaysia, Deep and Free Trade Area as a part of Association Agreements Georgia, Armenia and Moldova, Economic Partnership Agreements with African, Caribbean and Pacific countries (ACP) continue currently. On the other hand, the EU‘s finished but not entered into force free trade agreements are with Singapore, Columbia, Costa Rica, El Salvador, Guetamala, Honduras, Nicaragua and Panama, Ukraine, Cote d‘Ivoire, Cameroon, Southern African Development Community, Ghana Eastern African Community. (―The EU‘s free trade agreements – where are we?‖ http://europa.eu ,2013) Besides, it also signed many Free Trade Agreements (FTAs) already in force with Turkey‘s rival countries such as South Korea (2011), Peru (2013), Mexico (2000), South Africa (2000) and Chile (2003). (―The EU‘s free trade agreements – 3 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo where are we?‖, http://europa.eu/rapid/press-release_MEMO-13-282_en.htm, 2013 ) The EU does not include Turkey in these free trade agreements with third countries. Therefore, Turkey has to negotiate on its own with these third countries. Moreoer, most of these countries which signed agreement with the EU, are not eager to conclude same Free Trade Agreements with Turkey. Because,these countries are Turkey‘s economic competitors. So, Turkey has disadvantage to compete with these states and this situation has had a negative impact on Turkey‘s trade interests. ―Goods of these third countries are subjected to tariffs by one party but not by the other part of this customs union‖. This situation creates unfair competition and put Turkish industry disadvantageous position ( Dedeoğlu, 2010). Furthermore, the European Union also plans to negotiate a FTA (Transatlantic Trade and Investments Partnership) with the USA which is the fourth country in Turkey‘s import. ―A trade pact between the USA and the European Union would encompass half the world‘s economic output and a third of world trade, be most ambitious trade accord since the 1995 formation of the World Trade Organization (―France threaten to block start of EU/US free trade talks‖, http://www.reuters.com, 2013). It is an important opportunity for both sides. But, Turkey worried about this plan. If the EU will sign this agreement with the USA which does not be included Turkey, Turkey will become disadvantage completely. In this situation, unfair competition created by these FTA‘s will affect adversely Turkey‘s foreign trade gap (Onaner, 2013: 25). In this context, Herman Van Rompuy, President of the European Council, touched upon this free trade deal which negotiate between the EU and the USA and its negative effects to the Turkish economy. He said ―For Turkey, since you are part of the Customs Union with the EU. This trade deal (EU-USA FTA) will have important consequences too. That‘s why the European Union is looking into the best way to keep Turkey involved in the process‖ (Speech by President of the European Council Herman Van Rompuy, http://www.abhaber.com , 24 May, 2013). Another important problem within the scope of the Customs Union is the free movement of Turkish workers in the EU. The European Union has not fulfill its obligations stemming from Ankara Agreement and Additional Protocol toward Turkey. In addition to the free movement of goods, the Ankara Agreement also includes progressively securing the free movement of workers “Contracting Parties agreed to be guided by Articles 48, 49 and 50 the Treaty establishing the Community for the purpose of abolishing restrictions on freedom of establishment between them” (article 12), the abolition of restrictions on freedom of establishment between them (article 13) and the abolition of restrictions on freedom to provide services between them (article 14) (Ankara Agreement, 2013). The Additional Protocol, signed in 1970 and entered into force on 1 January 1973, Article 36, titled ―Workers‖ provided ―Freedom of movement for workers between Member States of the Community and Turkey shall be secured by progressive stages in accordance with the principles set out in Article 12 of the Agreement Association between the end of the twelfth (1976) and the twenty second (1986) year after the entry in to force of that agreement‖ (Additional Protocol, 1977). According to the Additional Protocol, Association Council would decide the rules of free movement of Turkish workers in the EU/EC. (Article 36) In this context, Association Council agreed on three decisions on more detailed rules on the status of the Turkish workers in the EU/EC: In the Association Council decisions no 2/76, no 1/80 and no 3/80 (Karluk, 2007: 490). The Association Council Decision No 1/80, Article 8 provides if a job offered by the Community, was not be able to provide for by citizens of the member states, the Community would make an effort recognize the Turkish workers‘ rights of second priority ( 1/80 Ortaklık Konseyi, Kararı, 1980). But, this decision has not fulfilled by the EU and Turkish workers has not been granted the right of second priority which apply for a 4 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo job if the EU citizens do not apply. Finally free movement of Turkish workers has not been materialized in 1986. Within the context of freedom to provide services of Turkish citizens, principle of standstill is very important. The article 41 of the Additional Protocol ―provided for a standstill clause: The contracting parties shall refrain from introducing between themselves any new restriction on the freedom of establishment and the freedom to provide services‖ (Groenendijk and Guild, 2012: 11). So far, all EU member states have not implemented this principle fully in spite of a decision of the European Union Court of Justice. One of the main problems is visa for Turkish citizens within the scope of Customs Union. But, recently, Turkey has become transit gate for illegal human migration. Especially, Turkish-Greek border (Meriç River) is the main gateway to the EU for illegal migrants. Turkey is a transit country for migrants from Asia and ports of Africa such as Afgans, Pakistanis, Bangladeshis, Algerians and Moroccans. In 2010, according to Frontex, approximately 80 percent detected illegal crossings in to the EU, took place by the Turkish-Greek border (Stiglmayer, 2012: 101). This situation causes concerns to EU members and they do not accept the lifting of visa restrictions. But, ―this visa restrictions and requirements have been an important problem for Turkish citizens since 1980 and create unfair competition‖. Especially, because of the long visa procedures, most adversely affected group is Turkish businessmen. Turkish goods can freely circulate in the Custom Union, but their producers or owners cannot goto EU freely. For this reason, they have lost many business contacts. Visa restrictions ―constitutes not only a technical barrier but also a psychological obstacle for foreign trade‖ (―Visa exemption ‗accelerated‘ Turkish exports‖ www.hurriyetdailynews.com , 2013) Moreover, current visa requirements violate Turkey-EU Customs Union Agreement and the principle of free movement of goods as it is declared in the Association Council Decision 1/95 as well as the Article 41 of Additional Protocol (Yazıcı, 2012: 37). There should be progress in talks oneasing visa restrictions for Turkish citizens travelling to the EU. The EU has been using visa liberalization as a tool for influencing reforms in the neighboring countries instead of enlargement (Özler, 2012: 122-123). After granting visafreedom to the Western Balkan Countries – Serbia, Macedonia, Montenegro, Albenia the EU wants to give visa-free travel for Georgia, Moldova, Ukraine, Armenia, Azerbaycan and Belarus (Özler, 2012: 127). But, ―same political support does not exist in the case of Turkey. Turkey remains the only state without an official EU roadmap towards visa-free travel among all the candidate and potential candidate countries‖. According to Özler, ―Visa liberalization for Turkey has been presented by European officials as a threat to the EU‘s internal security since it would increase the crime rate in the EU countries‖ (Özler, 2012: 122-123). On the other hand, ‗Imposition of visa requirements for Turkish nationals violates the Additional Protocol. ―As from entry into force of that protocol of a requirement that Turkish nationals must have visa to enter the territory of a member state in order to provide services there on behalf of an undertaking established in Turkey, since, on that date, such a visa was not required. In this context, Germany‘s visa practice was deemed unlawful given that, starting from July 1980, Germany introduced a visa requirement for all Turkish national seeking entry in to Germany‖ (Özler, 2012: 123-124). The European Union Court of Justice has played an important role in interpreting rules based on the Association Agreement. Soysal Case of the European Court of Justice (2009) has been a milestone in the field of visa liberalization of Turkish citizens. TwoTurkish lorry drivers Mr Soysal and Mr Savatlı who were refused visas in order to drive to 5 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Germany. They appealed against the refusal to the administrative court in Berlin on the basis of that under the agreement it was unlawfull for Germany to require them to obtain visas to travel to Germany at all (Groenendijk and Guild, 2012: 11). In this Case, German authorities claimed that ―visa requirement for Turkish service providers was a requirement of EU law as Turkey is on the black list of the EU‘s Visa regulation 539/2001‖. European Union Court of Justice confirmed its constant jurisprudence that international agreements of the EU take priority over secondary Community legislation. According to the European Union Court of Justice, visa requirements for Turkish service providers restrict economic freedoms and Additional Protocol must be applied and the Visa Regulation dis applied as regards Turkish service providers. Finally, ―Soysal judgment gives a personal right to any Turkish national who wishes to come to the EU to provide services to enjoy access to the territory of any member states on the basis of same conditions which applied either in 1973 or on the date when the relevant member state joined the EU‖ (Groenendijk and Guild, 2012: 18). For this reason, German authorities changed the mandatory visa requirement to reflect the position as it was in 1973. Some of the groups of Turkish nationals such as lorry drivers, worker servicing installations, important artists, researchers and sportsman who were not subject to the visa requirement then were removed from the visa list. (Groenendijk and Guild, 2012: 33-36). In addition to, the European Commission announced it would life visa requirement for Turkish citizens who provide service to Germany, the Netherlands and Denmark asking that the booklet handed out to border officials in those countries be changed accordingly. The new change allows for Turkish citizens providing service to stay for two months in Germany and three months in Netherlands and Denmark without holding a visa. According to this Commission statement the visa exemption for Turkish citizens applies only to Germany, Netherlands and Denmark among the 26 Schengen countries (―EU lifts visa for Turkish…‖www.hurriyetdailynews.com , 2013). European Union officials are reluctant to sign agreement and stipulate to sign the readmission agreement in order to sign visa exemption agreement with Turkey. In this context, Filori said that ―as soon as Turkey signs the readmission agreement, the visa liberalization dialogue would be started by the European Commission but did not give any date for visa free travel‖. In June, 2012 Council authorized the European Commission, to begin talks with Turkey on visa liberalization. The Commission presented a roadmap to Turkey for a visa free regime at the end of November 2012. ―The roadmap outlines specific areas where Turkey should implement a series of reforms, laws and directives such as security, migration management, public order and fundamental rights. Moreover, the progress on the roadmap will be monitored by the Commission‖ (―EU won‘t ask Turkey to…‖, www.todayszaman.com, 2013). Turkish authorities said that it will not ratify the readmission agreement that it sees practical visa facilitation measures for Turkish citizens. Because, Turkey is worried that the agreement will impose a heavy burden on Turkey when it has to take back a large number of irregular immigrants from third countries that use Turkey as a transit point to enter the EU ( ―EU won‘t ask Turkey to…‖, www.todayszaman.com , 2013). In the latest development in this regard,President of the European Council Herman Van Rompuy was in Ankara in 23 May 2013 and held meetings with Turkish officials. Rompuy said on visa at the meeting “I trust that an early signature by Turkey of a so called readmission agreement with the European Union would allow us to advance quickly through the 6 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo roadmap, progress can be swift. Visa free travel would give our relationship a new impetus.”(Speech by President of the European Council Herman Van Rompuy, http://www.abhaber.com , 2013) As a conclusion, visa liberalization process would improve EU-Turkey relations, adding new momentum to the accession negotiations and increase the EU‘s soft power in the international arena. Another important problem is that Turkey-EU Customs Union does not cover agricultural products. Customs Union covers only industrial goods and processedagricultural products. Therefore, Turkish farmers cannot exporttheir agricultural products to the EU. So, Customs Union must include agricultural products. On the other hand, Turkish exporters were affected adversely from the EU‘s anti-dumping investigations and to Turkish products. Besides, transport quotas to Turkish transport sector that have been imposed by the EU must be removed. Finally, the Customs Union envisioned that Turkey received assistance from the EU, but the EU did not allocate support as much as Turkey expects (Yazıcı, 2012: 32-35). All in all, Bureaucratic and administrative obstacles continue and Turkish firms have not had equal opportunities as EU firms. The EU‘s goods and services come to Turkey more easily than Turkish goods and services go to Europe. In this framework, Turkish economy minister Zafer Çağlayan said that ―If the current situation continues, we may have to put the Customs Union with the EU on the table for reassessment as it is now working against Turkey‖ (Minister says Turkey to ―reconsider‖ EU Customs Union, http://www.todayszaman.com , 25 March 2013) Cyprus Issue Another important problem in the Turkey-EU relations is a Cyprus Problem. This issue affects negatively not only Turkey‘s whole accession negotiations, but also affect the Customs Union with the EU. But, according to Dedeoğlu, Cyprus problem is an apperent reason within the context of Customs Union issue. Customs Union issue must not only be understood as a side effect of the Cyprus problem. This problem is bigger than this (Dedeoğlu, 13 March 2010) Wrong policies implemented by the European Union have because Cyprus Issue becomes more complex. On the referandum of Annan Plan, aims to reunite the divided island in April 2004, Turkish Cypriots said ―yes‖ but Greek Cypriots said ―no‖ with large majority. The European Union accepted a part of a divided island as a sole representative of the island, member state to the EU. On the other hand, isolation on Turkish Cypriots who want to a solution to the Cyprus Issue and said ―yes‖ to the Annan referendum. Since 3 October 2005, Turkey and the EU has begun the accession negotiations for Turkey‘s EU membership, so far, the EU could opened with Turkey only 13 of the 35 chapters and has only completed one chapter. Main reason of slow pace of accession negotiations is suspension of many chapters at the Turkey‘s accession negotiations due to the Cyprus issue. After Greek Administration of Southern Cyprus‘s become EU member, the European Union demand to extend Additional Protocol of the Ankara Agreement and Customs Union to 10 new members which joined the EU in 1 May 2004. But Turkey refused to open its ports and air space to Greek Cypriots‘s vessels and airplanes. At this point, ―the EU sent mixed signals, extending its one hand the carrot of accession talks and waving a stick in the other hand warning that negotiations could be suspended at any time‖ (Patton, 2007: 344). In 2006, the EU Council froze the Turkey‘s accession negotiations in eight chapters. These chapters are free movements of goods (1), right of establishmentand freedom to provide 7 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo service (3), agricultural and rural development (11), fisheries (13), transport policy (14), Customs Union (29) and external relations (30). In 2007, France has declared that it will not allow the opening of5 chapters as they are directly related with full membership. These chapters are Agriculture and rural development (11) (this chapter already blocked in 2006), economic and monetary policy (17), regional policy and coordination of structural instruments (22), financial and budgetary provisions (33), and instructions (34). And in December 2009, Greek Administration Southern Cyprus blocked six chapters of Turkish accession negotiations. These chapters are freedom of movement of workers (2), energy (15), judiciary and fundamental right (23), justice, freedom and security (24), education and culture (26), foreign security and defense policy(31)(Turkey-EU relations, mfa.gov.tr, 2013). As can be seen above many chapters are related Customs Union in addition to the Customs Union chapter(29). Therefore, in order to solving the problems in the field of Customs Union and related subjects such as free movements of goods, freedom of movement of workers and right of establishment and freedom provide service, accession negotiations must be alive as soon as possible. Especially, in order to solve the problems within the scope of Customs Union, accession negotiations should be started. Therefore, opening new chapters in Turkey‘s accession process will be a strong and a clear signal demonstrating that the process is moving forward. Last year, Southern Cyprus took up EU presidency, during the Greek Cypriots‘ presidency, Turkey refused to have anything to do with a country it does not recognize. Turkey froze diplomatic relations with the Greek Cypriot‘s presidency but not EU‘s other institutions such as Commission and High Commissioner for For Foreign Policy. One of the main reasons for the introduction of the ― positive agenda‖ was to overcome this issue. Turkish Foreign Minister said that if any EU country will break the embargo on Turkish Cypriots, as promised before the 2004 referendum, then Turkey will open its ports and airspace to Greek Cypriot vessels which is the apparent reason behind blocking EU accession negotiations (Yetkin, 2013). In this context, Turkey demands the EU to lift the isolation of Turkish Repuclic of Northern Cyprus (TRNC) as it promised to in April 2004 before Ankara will open its ports to Greek Cypriot vessels and its air space to Greek airplanes. In this framework, there is a positive signal that Anastasiades won the election in the Southern Cyprus who backed a 2004 UN plan to reunite the island. Turkey welcomed the election of Nicos Anastasiades but his first priority their ongoing economic crisis. Therefore, he had not met with the Turkish counterpart Derviş Eroğlu (Paul, 2013). Despite being frozen Turkey-EU relations, today Turkey continues to see EU membership as a strategic goal. Turkey‘s goal of the EU membership provides a win-win situation for the two sides. Because, Turkey and the European Union needs each other. As expressed by Egemen Bağış ―A European Union without Turkey is poor, plain and simple one…the sun of Europe rises from İstanbul every morning‖ (―Europe‘s sun rises from İstanbul‖, hurriyetdailynews.com). The Importance of the Negotiation Process to Revive Accession negotiations are the main subject in the Turkey-EU relations. Turkey‘s recent progress in the direction of democratic consolidation must also be counted as a important achievement of the EU‘s policy of enlargement (Zucconi, 2006:94). Because ―the EU enlargement process continues to offer an instrument by which non-democratic and other negative tendencies can be checked. It also continues to act as an ―anchor‖ and a ―disciplining factor‖ so that instable Turkey would affect EU‘s European 8 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo NeighborhoodPolicy‖. Eventually, there is not any progress in the Turkey-EU relations will reduce EU‘s influence Turkey and would undermine the EU‘s international credibility in the eyes of other countries aspiring to membership(Alessandri, 2010: 97). Turkey‘s embassador to the EU said that ― in the absence of any clear perspective of accession, there is no reason why Turkey should align its legislation toward narrow EU standarts. To put it simply the EU has lost its leverage on Turkey‖ ( ―EU has lost its leverage on Turkey‖, http://euobserver.com , 2013). The quest for EU membership acted as a disciplining factor on Turkey. The ―EU anchor‖ also fostered democratization and supported Turkey‘s reforms undertaken in the 1990s to gain candidate country status (Alessandri, 2010: 88). One reason of the European Union‘s win the Nobel Peace Prize is the EU‘s contributions to the human rights and democracy standards in Turkey. In this context, in 2006, Turkey-EU negotiation process stalled thereafter pace of reforms achieving the EU standards slowed down considerably. The reform process has never fully regained momentum since then support for EU membership has declined among the public (Alessandri, 2010: 91). But, Turkey‘s accession process remain deadlocked for last five term Council Presidency consequently . Since, June 2010, no chapter has been opened. In this context, in Turkey‘s Accession Process 17 chapters are blocked. However, it becomes very positive developments recently. The European Parliament‘s General Assembly adopted a 2012 progress report on Turkey providing a potential catalyst for the opening of new chapters for Turkey after years of deadlock between Turkey and the EU. Member of the European Parliament called on the European Council to open negotiations on the judiciary, fundamental rights and home affairs( justice, freedom and security) to accelerate the reform process (―New EU Chapters to give pace to Turkish reforms‖, hurriyetdailynews.com). On the other hand, Finland‘s foreign minister said that Finland regrets the political blockade that has been applied to Turkey for Ankara‘s EU accession process. He also said they thought Turkey‘s negotiations should proceed normally and ―there will be some chapters opened‖ (―Finland regrets block on Turkish bid‖, hurriyetdailynews.com). In France, Sarkozy, staunch opponent of Turkey‘s EU membership lost the election and François Hollande who have more favorable view of Turkey‘s EU membership. After Hollande become president, France‘s foreign policy towards Turkey will change likely. France‘s new government give signals it could reconsider its position with regard to the negotiation chapters that had blocked in 2007. After Sarkozy, France‘s new president François Holland decided to let one of five chapters that it had blocked under Sarkozy term. The recent decision by France to lift its blockage on 22. chapter, ―Regional Policy and Coordination of Structural Instruments‖ is a promising first step. France‘s blockage on the remaining four chapters should be also come to end in the near future. According to Flautre, lifting the block on chapter 22 is just the first stage showing France‘s positivity towards Turkish membership and signals that French government may lift their block of other chapters. She emphasized opening of chapter 23 ―Judiciary and fundamental rights‖ and chapter 24 ―Justice, freedom and security‖ are also very important for Turkish democracy (Donat, 2013). On the other hand, Turkey is seen as a model country by the Muslim nations. Turkey‘s long lasting ties with the EU and the USA, secular state structure, especially, Turkey‘s experience with secularism and bid of EU membership are very important (Kahraman, 2010: 704). So Turkey is the unique country which compatible of Islam and democracy. Therefore, peoples of the Arab countries aspires to the lifestyle in Turkey. At the same time, Arab countries also take as an example Turkey‘s liberal economy. Turkish economy has grown and become more open continuously since 1980‘s. Its liberal economy is a 9 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo good model for development for Arab countries. Therefore, with European Neighborhood Policy, the European Union, who want to create democratic and economically strong countries in its vicinity, needs Turkey as an unique partner with its positive image in the Middle East (Kahraman, 2010: 708). For this reason, starting accession negotiations again will make a positive impact not only Turkey-EU relations but also relations between Turkey and Muslim countries. Positive Agenda In order to overcome this impasse at the accession negotiations, the EU tries to finding a new way to regain momentum to the Turkey-EU relations: ―positive agenda‖. It started of the talks on 17 May 2012. Main aim of the ―positive agenda‖ process is to keep the accession process alive and make progress in the field of Turkey‘s accession negotiations which seventeen chapters have been blocked by the European Council because of the Cyprus dispute. Positive agenda process is new way of work to support Turkey‘s accession process to the EU, but it is not alternative to the accession process. ―It covers a broad range of areas such as intensified dialogue and cooperation on political reforms, visa, mobility and migration , energy, fight against terrorism, further participation of Turkey in EU programmersas well as Customs Union and trade in the negotiations and free trade agreements‖ (Enlargement Strategy 2011-2012, 2011: 19). Conclusion There are many problems in the relations between Turkey and the EU and future of relations between the EU and Turkey looks very unclear. At first, there is no consensus about Turkey‘s membership to the EU and accession negotiations are stalled. Therefore, there are a lot of problems such as the EU‘s FTA‘s with third countries and visa exemption of Turkish citizens within the scope of Customs Union. These problems should be solved and all trade obstacles should be removed. For this reason, accession negotiations should be initiated as soon as possible. Chapter of the Customs Union is one of the most successful subjects in the accession negotiations. Because, Turkey has 17 years of experience in this field. Progress achieved in the accession negotiations in the framework of the Customs Union chapter, will contributes to Turkey-EU relations and affects all accession negotiations positively. If the EU wants to be global actor and economically competitive power in the changing world, in the near future, after three years without any significant progress in the Turkey‘s accession negotiations should pay attention and resume Turkey‘s accession negotiations and improving ties with Turkey in the coming period. In this context, Turkey‘s membership of the EU should be accepted. Not to accept Turkey‘s membership to the EU is contrast to the principles founded on the Union. Turkey hopes for the opening of one chapter in the accession negotiations and open a new page in TurkeyEU relations during the Irish rotating presidency of the European Union. Therefore accession negotiations must go on. Because, Turkey‘s EU membership will add dynamism to the European Union. 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Yetkin Murat ―Can Cyprus solve the Turkey-EU http://www.hurriyetdailynews.com/can-cyprus-solve-the-turkey-eudeadlock.aspx?pageID=42796&NewsCatID=409 , (28.04.2013) deadlock?‖, Yılmaz, Kamil (2011) ―The EU-Turkey Customs Union Fifteen Years Later: Better, Yet not the Best Alternative‖, South European Society and Politics, Vol.16, No.2, June 2011, pp. 235-249. What is the Common Customs Tariff? http://ec.europa.eu/taxation_customs/customs/customs_duties/tariff_aspects/ (28.04.2013) , Zucconi, Mario (2006) ―Turkey‘s Vital and Turbulent Road to the European Union‖, The International Spectator: Journal of International Affairs”, 1/2006, p.83-94. 13 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1616 Title A name given to the resource How to Overcome the Crisis in Relations between the European Union and Turkey Author Author EFE, Haydar Abstract A summary of the resource. There has been a slowdown in the accession negotiations due to the blockage of negotiations chapters since 2006. EU affairs have lost their past lure in Turkey. And, Turkey decided to freeze its relations with the Presidency of the Council of the EU during the second half of 2012 and not to attend meetings chaired by the Cyprus EU Presidency. But despite these negative developments, the enhanced political dialogue between the EU and Turkey has continued. In this framework, the European Union has proposed a new positive agenda in order to enhance Turkey-EU relations and promote reforms in Turkey. The aim of this process is to keep the accession process of Turkey alive and bring a new momentum into Turkey- EU relations. In addition to, the new government in France gives signals it could reconsider its position with regard to the negotiation chapters that had blocked in 2007. Therefore, at present, serious efforts are needed to revive the negotiation process with a new impetus. Keywords: international relations, the European Union Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 978-9958-834-23-3 https://omeka.ibu.edu.ba/files/original/3f2aca1042424a84adcbf6138728ba5e.pdf bba49af165e5255f75816d0c31ea9195 PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo Morality and Ethics of Accounting Cemal Elitaş Yalova University, Yalova, Turkey cemalelitas@gmail.com Çetin Yurt International Burch University, Sarajevo, Bosnia and Herzegovina yurtcetin@gmail.com In our present day, even though morality and ethics are used interchangeably in most cases, what they refer to is usually different. Accounting morality may vary according to time and space, however, when the ethics in accounting is mentioned, what is usually observed is whether the methods employed by accounting to achieve its goals are righteous or unrighteous. This rectitude is not relative but absolute righteousness. This study aims to analyze the concept of ethics in the profession of accountancy, how these codes of ethics are formed, and the influence of both public administration and business circles on these codes and how individuals currently employed in the accountancy business interpret these codes. The implementation difficulties of codes of ethics which the employed in the profession need to conform to for the social benefits, welfare, and professional dignity, the measures taken by the chambers and joint work groups, and the suggestions provided by the professionals that will contribute to the process will be given at the end of the study. Keywords: Morality in Accounting, Ethics, Ethics in Accounting, Business Ethics. 75 � https://omeka.ibu.edu.ba/files/original/bdc2c96bdc7dcfd95527e102f1e83471.docx 670ed75029009f2ef2bc3587089b31a3 https://omeka.ibu.edu.ba/files/original/0424205f6895c0db53632e7d0a263f8f.pdf f246807d7cee081941ac93e4bedf876b PDF Text Text International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Morality and Ethics of Accounting Cemal Elitaş Yalova University, Yalova, Turkey cemalelitas@gmail.com Çetin Yurt International Burch University, Sarajevo, Bosnia and Herzegovina yurtcetin@gmail.com Abstract In our present day, even though morality and ethics are used interchangeably in most cases, what they refer to is usually different. Accounting morality may vary according to time and space, however, when the ethics in accounting is mentioned, what is usually observed is whether the methods employed by accounting to achieve its goals are righteous or unrighteous. This rectitude is not relative but absolute righteousness. This study aims to analyze the concept of ethics in the profession of accountancy, how these codes of ethics are formed, and the influence of both public administration and business circles on these codes and how individuals currently employed in the accountancy business interpret these codes. The implementation difficulties of codes of ethics which the employed in the profession need to conform to for the social benefits, welfare, and professional dignity, the measures taken by the chambers and joint work groups, and the suggestions provided by the professionals that will contribute to the process will be given at the end of the study. Keywords: Morality in Accounting, Ethics, Ethics in Accounting, Business Ethics. Introduction Morality means good qualities and good habits. Another definition of morality is the rules of behavior adopted by people in the community to which they are obliged to comply (Çalışır & Şefkatlı, 2003). It could be spoken of personal morality when this behavior and way of life has personal nature, social morality when it has social nature and professional ethics when it is about a particular occupational group respectively. Established at the end of a given period, these rules vary from person to person and society to society. This variability of moral values in time and space do not apply to ethics because ethics is a philosophical concept which attempts to determine what is right and what is wrong in conjunction with the way to behave in order to achieve the truth. In all aspects of life throughout the history, morality and ethics were concepts of integrity, honesty and good faith and have been discussed and given much importance to. As a result of this, for the science of accounting whose historical depth stretches beyond BC, accounting ethics is not a new concept. Similarly, the concepts and rules of business ethics have also always been important. As the world economy having the features of closed economy in general until the last century, the rules of accounting had the characteristics usually in the form of tax records and the government accounting, and as a result, each country had its own specific accounting rules. 117 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo In the last century, and in particular after the Second World War with the impact of globalization and disappearance of economic boundaries, the accounting rules began to be determined at international dimensions. That the accounting being determined at international dimensions has paved the way to the emergence of internationally recognized accounting principles of ethics. Accounting ethics, in simplest terms, can be summarized as providing the most accurate information for the addressee through financial statements in accordance with accounting rules. In the context of accounting ethics, "the codes of ethics applicable to all accountants," which were identified by the International Federation of Accountants (IFAC), and comprise 7 principals, are elaborated in this study. General Concepts Of Morality and Ethics Human beings are exposed to various influences, trained from birth onward, and as a result of these trainings, the experience they gain is reflected to the outside world, for these behaviors, they are considered as an asset by the surroundings. As people individually vary in terms of their thought, life styles, these differences decrease in their families, societies and the inhabitants of the country in which they reside. In this perspective, we can come to the conclusion that people, by living together, may give similar or even same reactions to some issues. These behaviors over time develop into a set of rules, which must be complied with, if differently treated, unwelcome by masses, and (whose sanctioning is in moral nature). Thus, the righteous behavior formed through a certain period of time is called morality. It means ethics, and righteous values. In different sources, it can be possible to meet in different definitions of morality. Moral means good quality and good habits. According to another definition, morality is the rules and the forms of behavior that are adopted by people and obliged to comply (Çalışır & Şefkatlı, 2003). Morality is presented to us not to postpone in the fluency of life and has sometimes formed sum of the values that repaired and all of them. People in the community that is told "moral" or "immoral", or is mentioned "exemplary moral values" has been drawn attention behind the person's behavior to the values (Çotuksöken, 2003). The explanation of variance between morality and ethnics is reaction to the face of situations when the people give reacts. In other words, individual decides which one is right or wrong in a condition in daily or professional life. That is for individual „what is valuable‟ or „what is the right or the questions what valuable behavior is‟ as an action questions as the qualitative one such as ethics, good, duty, necessity, permitted takes place in the concepts of morality; namely, morality is a phenomenon stepped in decision-making in the concept of ethnics (Tepe, 1999). The concept of ethics and morality in the field of philosophical ethics as a discipline is possible to handle. Ethics is shown how to behave with common sense and refers to the duties. It concerns about the ability to discriminate between right and wrong and the truth 118 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo that the tendency to carry out the truth (Sözbilir, 2000). For example, when accounting ethics mentioned how the financial statements prepared in accordance with the purpose of accounting for the preparation and the presentation that determine to be right, is the best suited to apply as morality. If some approaches are from the outset of nature, ethics deal with as a branch of philosophy. If some approaches are in the daily use, it is similar with morality. If some approaches get morality contented; in this way, the question of “What are the approaches in morality?” determines the answer to the question form. In the pursuit of these determinations rightly, it is called as the directions of ethnics‟ job that are followed. Here is the way that will be followed; ethics are seen as morality-behavior and their determinant that is related to information carried to the thinking of direction (Çotuksöken, 2003). Work Ethics Work Ethics is the sum of principles and rules that base on beliefs about what is right or what is wrong what is fair or unfair related to the conduct of business right (Şan & Sevgi, 2002). A job that is proper for the ethics is the job that is done by showing the necessary attention in the best way. Businesses as the institutions operating in certain environmental conditions are affected not only by their environments in the decisions that they give; they also affect their environments by their decisions and actions. Businesses‟ understanding the impact of their actions on society and taking these effects into consideration while taking decision and applying to them are related to the sense of social responsibility. Adam Smith, the father of Liberalism says: "the economic life is buried into the depths of social life. Habits of the society in which it operates, their morals and customs cannot be seen differently; in other words, the economy as alone cannot be separated from culture and discussed apart from others (Francis, 1998, p. 27). Business ethics that dominates a society is closely related to the personal ethics of individuals that make up that society. The things that determine individuals' personal morals are usually traditions, religious values and people who are taken as model figures and adopted thoughts. The historical development of business ethics dates back to ancient times. Writers and philosophers of Ancient Greek and Rome were not looking business and commercial activities well. Because they regarded this kind of activities involve with only ambitions of moneymaking and lies. They also thought that their civilizations would be degenerated by the corruptions that will be contaminated by these communities as a result of their relationship with barbaric traders (Arslan, 2001). Despite these negative attitudes of ancient Greece and Rome, this negative attitude towards commercial activities in ancient times was not the same in every society (Sözbilir, 2000). Religion‟s "rules that have to be accepted without any questioning" has been the most important factor on transmission of business and professional ethics that this religion has placed in the essence of societies from generation to generation. 119 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo For instance, Judaism views wealth as a gift of God and accepts a person‟s success as a heavenly occasion (Sözbilir, 2000). In addition, in holy books of Judaism, there are details regarding the regulations in business and vocational life. It would be fair to say, the most important factor behind the success of Jewish people who lead the economy in the whole world, and, in a way, holds the world economy under control is religious regulations. On one hand, we can claim that in the course of history, religion plays a determining role in constitution of moral values, on the other; we can say that since the 19th century it loses ground. The biggest reason for this the downfall of theocratic states and the existence of anti-religious factors in moral system. Then, the religious rules “which should be accepted without questioning” turn into rules questioned and Emile Durkheim puts it “secular morality” starts to rule over societies. This change in the morality of societies is unsurprisingly reflected in business morality. Moreover, till the last century, the economies of countries are closed economies and if people want to start unions, which can be possible in the borders of the country. Since the economies were closed, and were run on the base of the state control, it lead to the business morality changing from region to region in the same country and changing from country to country in the global sense. Up to now, the economical borders have been disappeared with the effects of globalization; business and vocational regulations gained an “above-the-place” status. In this way, national and international vocational organizations were established and the legal regulations serving to the needs of the particular occupations have been decided by independent organizations and are rationalized for public authorities. Accounting Ethics Since the beginning of life, people have expressed goods of economic value with financial instruments and felt the need to record them for different purposes. While the first records kept in this way are not known exactly, many instances of registers dated to BC have been seen as a result of current investigations today. There are some research results showing these records under certain conditions by Persians around 500 BC, by Greeks around 1400 and by many other similar civilizations. Given that, accounting in essence is a recording process subject to certain conditions; in other words, it could be said that these records kept by different societies in different formats are the first accounting examples. The first accounting records in the flow of history, Encyclopedia Diderot defines accounting accordingly: “Recording goods and money in the book and keeping their account.” These first accounting records were dissimilar in different societies as a natural result of working ethics mentioned above, affecting each society. These different forms of record keeping were expressed in different ways to the contemporary society and its economic life and in time it resulted in accounting values‟ being understood in diverse forms in different communities. A new economic order was created after the WWII in particular and new regulations started to be recognized at an international level in the field of accounting. The countries started to adapt to accounting rules recognized by international associations instead of their 120 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo own so as to be able to adapt to the new world order and keep pace at the market economy. Thus, despite some differences, when considered in the essence, principles of accounting ethics have become universally determined and applied, being cleared from international variances. The principles of accounting ethics has taken written form now like Declaration of Human Rights which in turn has increased the cooperation and the effectiveness of the jobs done between the accountants and the ones benefiting from accounting records. “Code of Ethics for Professional Accountants” has been published by International Federation of Accountants for which there is 156 members of occupational organizations from 114 countries and it has been translated into our language by TÜRMOB. Seven parts of this Code of Ethics for Professional Accountants, which has totally 18 parts, can be applied to all accountants, seven parts of it can be applied to self-employed accountants, and four parts can be applied to the accountants who work dependently (Uyar, 2005). We think that it would be sufficient in terms of the boundaries of the subject to examine the following rules of ethics, which are applicable to all accountants. 1. Accuracy and Impartiality The principle of accuracy is having the work done within the framework of justice rather than it‟s being right. Each transaction, which matches with laws and accounting regulations, is not accepted as correct. The moral side of accounting emerges here. Doing the job right is not the same thing with doing it in conformity with the principles of morality. Accounting transactions, which are in accordance with the relevant laws but are unethical, are called “Creative Accounting” and there is a lot of work on this subject. 2. Resolution of Moral Conflicts In market economy, everyone does procedures to ensure the maximization of benefit. Naturally this situation gives rise to conflicts of interest between parties. Conflicts of interest cause the accountant to be exposed to repression by their counterparts in both familial and personal relationship. An accountant who faces with such cases should implement the ethical policy of the institution on which he/she is dependent if that institution has one. If the moral conflict cannot be resolved in this way, the accountant should apply to the nearest supervisor. If he/she cannot still find a solution, he/should apply to a top administration. In addition, an accountant may take an appropriate idea or suggestion for the resolution of this conflict from an independent accountant or accounting institution in a confidential way. If a solution cannot be reached as a result of testing of internal investigation of all possibilities the accountant should resign as a last resort. 3. Professional Competency Accountants should reflect themselves as if they had mastery or experience that they don‟t have. Professional competency is gained through the theoretical education at the university, then special training, courses and work experience. Gaining professional competency necessities that one had worked for the first time at public or private companies at a certain period of time (trial period) at the status of a candidate and then the appointment as a principal on condition of fulfilling the requirements. 121 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo It is more probable to act as illegally. Particularly, one exam and one interview based on professional competency and mastery are required to be employed at state and private institutions. As a result of that evaluation, employment of a person lacking necessary knowledge and competency is unethical at all and means encouragement of unethical accounting action. Having academic career and knowledge of mastery is insufficient even it is a necessity. Ongoing economical changes and related national and international arrangements should be followed and updated. 4. Privacy Accountants have to keep the information about the costumers or employers secret. That privacy continues after the work between accountant and costumer ends as well. However, that privacy is not an absolute one. On condition of judiciary case or mandatory situation to reveal it, it is proper not to keep it, but to reveal is ethical. 5. Tax Application Companies have to pay certain taxes relevant to their income to the state. Accountants keep records of their income. Hereby, accountants have to detect basic income correctly. In case of an exposure to the pressure to reduce the income or extracting totally, accountants should act according to the article 2 rules with the title “resolution of unethical conflicts”. In addition, in the event of an error, it is the duty of accountant to correct the errors if declarations prepared in accordance with the performance of any other tax liability within the period specified by law. 6. Cross-Border Activities Moral requirements of cross-border activities may be encountered when dealing with different situations. For example, an accountant offering their services in a country other than the country in terms of the requirements of morality, providing that there are differences between the two countries, the following conditions must be met: a) The IFAC code of ethics offered in the country should be applied where the law is less stringent than the IFAC requirements of morality. b) Service presented the country's moral requirements, IFAC cases where more stringent ethical requirements of that country apply. c) Citizen in the host country requirements of morality, if necessary during the implementation of the services provided in a foreign country, and to be more stringent in case of IFAC, the citizen in the host country should be the requirements of morality. 7. Promotion Accountants in marketing and promotion of their own professions: a) Tools should not be implemented that undermine the dignity of the profession b) To offer the services themselves, they should not make exaggerated claims about the qualifications or experience they gained; c) They should not make false claims of other accountants Morality or ethical behavior defined by an internationally renowned psychologist needs to be implemented for the following four criteria (Sözbilir, 2000). Consider these criteria in terms of an accountant: 122 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo 1) The behaviors need to be identified about who will be affected: An accountant needs to understand who would be affected by the reports financial reports prepared by himself. 2) What is ethical behavior should be agreed on: An accountant‟s job is to determine which behavior is ethical. 3) Moral and ethical values should be above personal values: to be understood by their counterparts in financial statements correctly, a report prepared by an accountant needs to be within the framework of vocational ethics and should contain the correct information. 4) Accountant must find the strength of ethical decision and the application of the act itself: Accountant must find the strength of the application of the three the rules laid down in first Article. Accounting Ethics We have mentioned that ethics is a responsibility how should be treated. Ethical behavior, however, is not only legal responsibilities. An act that is not a matter of legality may be a non-issue of ethics. An ethical issue may not be included in the legislation. For this reason, ethics should be addressed within the framework of a concept and understanding (Gözener, 2008). Dignity of a profession plays an important role in the code of ethics. For the healthy functioning of the economic and commercial life, on the other hand, the code of ethics of the accounting profession needs to be established. Between the interests of the public and taxpayers, however, remain in the profession on the one hand, on the other hand it increases the pressure on the profession as it is related to monetary transactions (Ergun & Gül, 2005). In addition, professionals, if not show due diligence to ethical principles, it is believed that they are the most adversely affected by the situation. One of the most important tasks of accounting is to provide accurate and reliable information to people. If accurate and reliable financial information is not presented, providers of this information cannot take sound decisions. As mentioned before, if such a situation exists, it is the proof as it ethical terms are violated in terms of accounting. Accounting of Code of Ethics Implementation Issues There are three problems that harm the nature of accounting profession today. The first one is the increasing commercialization. This problem causes accountants to remain between their own interests and the service they offer to customers. The second problem is that there is confusion growing in business life. Finally, the changes in moral values and standards lead to the emergence of problems in terms of profession (Neu, Friesen, & Everett, 2003). İşgüden and Çabuk (2006) Investigated the effect of the concept of professional ethics and rules of professional life. Despite best efforts of professional organizations, they do not comply with the rules of professional ethics by giving priority to personal interests, and escaping from professional liability and legal liabilities, it is concluded that the most important reason is the lack of adequate legal and financial audit. Güney and Çınar (2012), found on the study of professional ethics perceptions that 123 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo accountants are aware of the importance of the ethical principles of the profession, they do not approve of the behavior contrary to them, but in practice they think there is unethical behavior and they demand more training support from ethical professional organizations. In addition, they concluded that there is in direct proportion to the level of income and adherence to ethical principles and the level of education. Accounting functions as a bridge between different interest groups and business and used by large segments, information provided by them directly affect their decisions. In this regard, the ethical accounting practices become an important issue. On the other hand, recent accounting scandals that emerged proves that the relevant laws, professional ethics and social values are paid adequate attention. Bayraktar (2007) stated in his study that accounting tricks in Turkey are conducted for two purposes. The first of these is to show business better, second, to show that business is worse. As a result of the study, the most common events include the following: tax evasion, embezzlement and corruption, concealment, document fraud (fake invoice), informal processes, using fictitious accounts. This kind of unethical behavior damaging the profession of accountancy in all aspects of society may have only one explanation; the person or entity want to hold their customers. In a study conducted by Kirik (2007) the accounting error and fraud is intense, on the basis that not only accountants are accountable but also particularly taxpayers, government policies, tax practices, professional organizations and the factors such as social structure as well. Demands and pressures to cheat, especially by taxpayers, put professional members in difficult situations such as conflicts between the public interest and professionals live. In addition, the lack of adequate financial control, legal gaps and member of the professions dependent on taxpayers in terms of money (source of income), causes this pressure to increase. Because when some taxpayers pay accountants fees, it is like to be for “paying less tax”. Again Aymankuy & Sarıoğlan, (2005) work, directly or indirectly, the reason in the professional members to conduct non-ethical behaviors is that taxpayers come first and legislation second. Members of the profession, believes that the most important factor that pushes an error is "constantly changing legislation”. In addition, the most important factor preventing unethical behavior is found to be the subsequent commitment to the state and the other factors are listed as conscience, a sense of shame and fear of punishment. Ethical and unethical behavior in today's world the most important behavior is cited as an example the act of bribe taking and giving. Accountants and trying to hide its own erroneous records to bribe government officials on behalf of the company are to gain unfair. Prohibited by the laws of all states to prevent this corruption and appealed to a certain criminal proceedings. However, the United Kingdom put into effect July 1, 2011 in the United Kingdom Anti-Bribery Act, with great interest. The most important reason for this interest is to be processed within the jurisdiction of the law of bribery offenses, the United Kingdom is that the nature of a law. In other words, the offense of bribery was committed, regardless of which country or countries in which the guilty party regardless of nationality law offense of bribery occurred processed the conditions considered and the United Kingdom courts shall be competent to judge. If you have a company or the employee's close links with the United Kingdom (residence, citizenship, participation, partnership) will be covered under this law (The Bribery Act 2010, 2010). 124 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo While doing their jobs in and intensive competitive environment, another factor directing professional accountants to act unethically in a matter of professional is the collection of fees. Accountants who cannot get value for their work, or at least who cannot get timely processing of their fees do not show too much sensitivity in their jobs. On the contrary, in the fear of losing the company, the ethical rules may be ignored in the name of a company that pays their fees on time. As a proposal to support other initiatives, training activities of other professional organizations, increasing the effectiveness of the controls, as well as the organization of responsibilities can be counted. Problems from the frequent changes in legislation often emerge as a very wide subject area of professional competence. The methods of profession selections come up as another factor of violating ethical codes. In fact, after a challenging training and examination system, members of the profession, professional members put aside training and remain inadequate to keep pace with developments and regulations. We believe that it would be beneficial that they are subjected to compulsory education at certain periods as well as training of ethics. Conclusion The concept of morality changes from person to person and from one society. It allows us to realize, however, that the relativity of the concept of ethics. Morality is a concept which shapes in a considerably long period of living together in societies brought a set of values, a common approach and to show differences between communities. The concept of ethics, however, involves the concept of morality in the field, and a universal approach to philosophical ethics, which also categorizes morality. These two concepts taken for accounting purposes, which is a branch of science, of course, this distinction will manifest themselves. While investigating the distinction between the concepts of ethics and morality, the distinction needs to highlighted and even emphasized. Written in different languages, especially on moral and ethical articles, essays and books should be well-read and translated into as correctly as possible. Otherwise, a lot of concept confusion is unavoidable. Especially, when investigating the concept of "morality" from dictionaries, "ethical" and appears to be in the same sense. Naturally, this situation results in the reflection of scientific studies of these two concepts in a wrong way. In order to prevent such usage that is far from scientific values, the distinction between morality and ethics is emphasized in many places. Works to base the same principles of accounting rules throughout the world has been continuing for many years. The different economic structures of the countries are making the standardization very difficult. Since economies have a different structure, it brings variety in business morality and in professional morality. Of all countries in the world, economic structure and the accounting principles used in parallel with the same characteristics as much as, if we ignore the effect of moral values of individual professional accountants, accounting ethics - reconcile the concepts of ethics in accounting. 125 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo References İşgüden, B., & Çabuk, A. (2006). Meslek Etiği ve Meslek Etiğinin Meslek Yaşamı Üzerindeki Etkileri. Balıkesir Üniversitesi Sosyal Bilimler Dergisi , 59-86. Şan, Ö., & Sevgi, Ö. A. (2002). Genel İşletme. Eskişehir, Turkey: Anadolu Üniversitesi Yayınları. Çalışır, A., & Şefkatlı, M. (2003). Beşeri Münasebetler. Ankara, Turkey: Tutibay Yayınları. Çotuksöken, B. (2003). Felsefe Açısından Etik: Tanımla-Sınırlar. (423), 13. Arslan, M. (2001). İş ve Meslek Ahlakı. Ankara, Turkey: Nobel Yayınevi. Aymankuy, Y., & Sarıoğlan, M. (2005). Muhasebe Mensuplarının Meslek Etiğine Yaklaşımları ve Balıkesir İl Merkezinde Bir Uygulama. Balıkesir Üniversitesi Sosyal Bilimler Dergisi , 8-14. Bayraktar, A. (2007). Türkiye'de Muhasebe Hileleri Tarihi. Trakya Üniversitesi Sosyal Bilimler Enstitüsü Yayınlanmış Yüksek Lisans Tezi . Tekirdağ. Ergun, H., & Gül, K. (2005). Muhasebe Mesleği Etik Kuralları ve Bu Kuralların Meslek Mensuplarınca Algılanışı. MUFAD Muhasebe ve Finansman Dergisi (25), 147-149. Francis, F. (1998). Güven. Ankara, Turkey: Türkiye İş Bankası Yayınları. Gözener, E. (2008). Etik ve İşletme Etiği Üzerine. Eğitişim Dergisi (18). Güney, S., & Çınar, O. (2012). Serbest Muhasebeci Mali Müşavirlerin (SMMM) Etik Algıları: Erzurum Örneği. Atatürk Üniversitesi İktisadi ve İdari Bilimler Dergisi, 26 (2). Kirik, Z. (2007, September). Muhasebe Hata ve Hileleri ile Muhasebe Mesleğinde Etik Afyonkarahisar'da Muhasebeciler Üzerine Bir Araştırma. Yayınlanmamış Yüksek Lisans Tezi . Eskişehir, Turkey: Anadolu Üniversitesi Sosyal Bilimler Enstitüsü. Neu, D., Friesen, C., & Everett, J. (2003). The Changing Internal Market for Ethical Discourse in the Canadian CA Profession. Accounting, Auditing and Accountability Journal, 16 (1), 91-94. Sözbilir, N. (2000). Türkiye'de Muhasebe Uygulamalarında Etiksel Boyutlar. Afyon, Turkey: Afyon Kocatepe Üniversitesi Yayınları. Tepe, H. (1999). Bir Felfese Dalı Olarak Etik. Doğu Batı Düşünce Dergisi (4), 12-14. The Bribery Act 2010. (2010). Ministiry Of Justice. Retrieved March 10, 2013, from justice.gov.uk: www.justice.gov.uk/downloads/legislation/bribery-act-2010guidance.pdf Uyar, S. (2005, July 12). Makaleler. Retrieved Jun 23, 2011, from muhasebetr: www.muhasebetr.com/yazarlarimiz/suleyman/001/ 126 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1543 Title A name given to the resource Morality and Ethics of Accounting Author Author ELITAS, Cemal YURT, Çetin Abstract A summary of the resource. In our present day, even though morality and ethics are used interchangeably in most cases, what they refer to is usually different. Accounting morality may vary according to time and space, however, when the ethics in accounting is mentioned, what is usually observed is whether the methods employed by accounting to achieve its goals are righteous or unrighteous. This rectitude is not relative but absolute righteousness. This study aims to analyze the concept of ethics in the profession of accountancy, how these codes of ethics are formed, and the influence of both public administration and business circles on these codes and how individuals currently employed in the accountancy business interpret these codes. The implementation difficulties of codes of ethics which the employed in the profession need to conform to for the social benefits, welfare, and professional dignity, the measures taken by the chambers and joint work groups, and the suggestions provided by the professionals that will contribute to the process will be given at the end of the study. Keywords: Morality in Accounting, Ethics, Ethics in Accounting, Business Ethics. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 978-9958-834-23-3 https://omeka.ibu.edu.ba/files/original/ec68975b424ad163254e237012924151.pdf a0d6aabc8c5210a4c8eb712a95a3c686 PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo The Measurement of Brand Personality in the City Brand: a case of Kayseri Emin Emirza Melikşah University, Kayseri, Turkey eemirza@meliksah.edu.tr İdris Seri University of Keele i.seri@gmail.com Cities all over the world use several conduits to promote themselves to relevant audiences such as investors, visitors and residents and in their efforts they commonly include striking logos and captivating slogans that feature in welcoming websites and advertising campaigns in national and international media. Because of those, city branding has in recent years become a prevailing activity within city management. Also brand personality component is major component of city brand identity. In this context, the main subject of the study is to evaluate brand personality dimensions of Kayseri city. This paper first describes the rise of city branding and the essentials of brand personality of city brand. Afterwards developed brand personality scale for products and service has been adapted to city branding. Sample of the study has been conducted at the universities in Kayseri. Data were collected via an online survey and face to face survey. Findings have been analyzed by factor and one way ANOVA analysis using SPSS 16 Program. Keywords: City Brand, Brand Personality, Brand Identity. 92 � https://omeka.ibu.edu.ba/files/original/0cfb1ef3c4c744749f43ef3e9570566f.docx c4aeeec49ea8d4b9a2e8114b9f011437 https://omeka.ibu.edu.ba/files/original/abaf6e2fca79f0233f994e2d0015215c.pdf c98f11c0dbc2ff954a2db9fdd75e2799 PDF Text Text International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo The Measurement of Brand Personality in the City Brand: a Case of Kayseri EminEmirza MelikşahUniversity, Kayseri, Turkey eemirza@meliksah.edu.tr İdris Seri University of Keele i.seri@gmail.com Abstract Cities all over the world use several conduits to promote themselves to relevant audiences such as investors, visitors and residents and in their efforts they commonly include striking logos and captivating slogans that feature in welcoming websites and advertising campaigns in national and international media. Because of those, city branding has in recent years become a prevailing activity within city management. Also brand personality component is major component of city brand identity. In this context, the main subject of the study is to evaluate brand peronality dimentions of Kayseri city. This paper first describes the rise of city branding and the essentials of brand personality of city brand. Afterwards developed brand personality scale for products and service has been adapted to city branding. Sample of the study has been conducted at the universities in Kayseri. Data were collected via an online survey and face to face survey. Findings have been analyzed by using SPSS 16 Program. Keywords: City Brand, Place Marketing, Brand Personality, Brand Identity. 1. Introduction Branding has become one of the most powerful tools in marketing strategy. Classical theories of brand management generally focus on how companies can build strong consumer brands that differentiate one seller from another (Aaker, 1996; Kapferer, 1997). Traditionally brands have been considered as the means of establishing a desired position in the minds of the customers that through perceived added values (Brown, Shivashanker, and Brucker, 1989) could attract loyal customers that willingly pay a price premium for the product or service (de Chernatony and McDonald, 2003). The majority of contemporary branding theories have been developed with an eye to consumer markets. A city's brand is increasingly considered an important asset for urban development and an effective tool for cities to distinguish themselves and improve their positioning (Ashworth and Kavaratzis, 2009: 520). City branding has in recent years become a prevailing activity within city management. Cities all over the world use several tools to promote themselves to relevant audiences such as investors, visitors and residents and in their efforts they commonly include striking logos and captivating slogans that feature in welcoming websites and advertising campaigns in national and international media. There has been a general agreement among academics and practitioners that places can be branded in the same way as consumer goods and services. Place or Destination branding is 168 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo a relatively new concept, however, and there is a lack of empirical academic research on the topic. This is in contrast to the increasing evidence in the press that branding, at least as a concept, is increasingly being applied to locations‟. Place branding, like place marketing in general, is impossible because places are not products, governments are not producers and users are not consumers. LiteratureReview Global Cities have endeavored differentiate themselves from each other, to assert their individuality in pursuit of various economic, political or socio-psychological objectives (Kavaratzis and Ashoworth, 2005: 506).In recent years cities are in search for new ways to promote themselves. Due to fast changes in technology and the shift from local to a globalized environment, cities are forced to compete with each other in order to be an attractive tourist destination, workplace, cultural rich place and much more (Kotler, 2002). Kavaratzis (2005:1) argues that the rising competition among cities might be seen as one of the effects of the globalization, which is visible in various forms and activity fields. The contemporary city has to be up dated continuously. In that sense cities develop strategies to support, to `sell` and advertise them within the global market. Literature survey reveals that there are mainly three approaches for promoting cities: cultural mega events, restoration and promoting heritage and the construction of iconic buildings (Hankinson, 2006, p.240; Kavaratzis, 2005:1). Among these approaches, construction of iconic buildings has been extensively utilized by many cities in order to get attention and attraction. The main motive behind this attempt is to create an identifiable image. There have been numerous studies of the promotion of individual and groups of places, since Burgess’ (1982) pioneering account of promotional media used in UK local authorities. Almost 20 years later Hankinson (2001) studied the practice of branding in 12 English cities, discovering that it was both widely used and little understood, which was a not altogether startling or indeed very helpful conclusion but is all too typical of many such investigations. Truemanet al., (2001: 8–13) struggled with this problem of transfer of conventional product brand analysis to places, oncluding that it was possible, „provided sufficient weight is given to different stakeholders‟. This is no more than a recognition that places have more varied „users‟, „owners‟ and „governors‟ than do commercial corporations and thus not only are the products more varied, so also are the goals of the producers and the utilities of the consumers. The two intrinsic weaknesses of stakeholder approaches, namely that the list will never be all-inclusive and the weighting between them crude, are so more evident with places than with commercial products as to effectively admit that the conditions can never be met. De Chernatony&Dall’Olmo Riley (1998) identify 12 perspectives on the definition of the brand found in the literature. After a critical examination of those perspectives, they suggest that „the brand is a multidimensional construct whereby managers augment products or services with values and this facilitates the process by which consumers confidently recognise and appreciate these values‟. The boundaries of the brand construct are, on the one side the activities of the firm and on the other side the perceptions of the consumers. The brand becomes the interface between these two. A branded product requires a brand identity, a brand differentiation and a brandpersonality (Aaker 1996). These are not so much separate attributes as re-statements of the same feature from different perspectives. Identifying and clarifying the brand 169 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo identity, or the core identity, is in itself an instrument of differentiation of one product from another and recognising its brand positioning, that is its relationship to competing products within a defined competitive arena. The process of product branding is both creative initiation and careful maintenance. Places can be easily assumed to possess the above characteristics of identity, differentiation and personality and can thus be managed to maximise equity, value and awareness. However, whether the terms suffer a significant shift in meaning when applied to place products remains to be considered. The importance of the image for the consumer or user of the place is what connects city branding to cultural geography. It also focuses upon the ever-necessary consumer orientation. We think of the place from the viewpoint of the end user; in terms of the way they sense, understand, use and connect to the place. All branding tries to endow a product with a specific and more distinctive identity (Cova, 1996) and that is, in essence, what most city marketing to do for cities. A place needs to be differentiated through unique brand identity if it wants to be first, recognised as existing, second, perceived in the minds of place customers as possessing qualities superior to those of competitors, and third, consumed in a manner commensurate with the objectives of the place. Thus identity, differentiation, personality and thereby positioning in competitive arenas are all transferable concepts as long as the implications of this transfer are fully understood. By this we mean that we can accept places as brandable products if their intrinsic and distinctive characteristics as place products are understood and a special form of marketing developed which accommodates and utilises these characteristics. Much of the literature from marketing specialists is not encouraging in these respects. There are at least three different sorts of place branding which are often confused in the literature, but which are really quite different operations conducted by different types of producers for widely different objectives. The first is geographical nomenclature, the second, product-place co-branding and the third, branding as place management. Geographical nomenclature is merely where a physical product is named for a geographical location. The archetype is the sparkling wine „Champagne‟. City Brand Perssonality In consumer behavior research, a considerable amount of attention has been given to the construct brand personality, which refers to the set of human characteristics associated with a brand. Researchers have focused on how the personality of brand enables a consumer to Express his or her own self (Belk 1988), an ideal self (Malhotra 1988), or specific dimentions of the self (Kleine, Kleine, and Kernan, 1993) through the use of a brand. The work of Aaker (1997) inspired the majority of the research on brand personality to date. He meticulously developed a 44 item Brand Personality Scale which encompasses five broad dimensions: Sincerity, Excitement, Competence, Sophistication, and Ruggedness. The scale has served as a brand personality measure in many studies and its factor structure proved to be robust in several of them (Aaker, 1997; 1999; Aaker, BenetMartinez, and Garolera, 2001; Kim, Han, and Park, 2001). However, Aaker‟s scale has recently received criticism on several grounds. 170 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo Brand Identity, Brand Image and Brand Personality Kapferer (2008) defines brand identity as a brand‟s meaning as put forward by the firm. It is the way a company wants to present its brand to its target groups. Brand image, on the other hand, is the consumers‟ perception and interpretation of the brand‟s identity (De Pelsmacker, Geuens, & Van den Bergh, 2007). Academics typically conceptualize brand identity and image as multi-dimensional constructs of which brand personality is an important component. Keller (2008), for example, defines brand image as consisting of (1) user profiles, (2) purchase and usage situations, (3) personality and values, and (4) history, heritage and experiences. Aaker and Joachimsthaler (2000) organize brand identity elements around four perspectives: (1) the brand as a product, (2) the brand as an organization, (3) the brand as a person, and (4) the brand as a symbol. Personality in Human Personality Scales Psychologists define the substance of personality as „the systematic description of traits‟ (McCrae and Costa, 1987: 81), where traits are „relatively enduring styles of thinking, feeling, and acting‟ (McCrae and Costa, 1997: 509). After decades of research on a taxonomy of human personality, consensus now rests upon five dimensions that provide a complete description of personality: (1) Extraversion or Surgency (talkative, assertive, energetic), (2) Agreeableness (good-natured, cooperative, trustful), (3) Conscientiousness (orderly, responsible, dependable), (4) Emotional Stability versus Neuroticism (calm, not neurotic, easily upset), and (5) Openness or Intellect (intellectual, imaginative, independent-minded) (John &Srivastava, 1999). The “Big Five” dimensions are a result of analyses of the natural language terms humans use to describe themselves and others (Goldberg, 1993). Although the development of the Big Five was not theory-driven, most important personality constructs as put forward by personality theorists as diverse as Jung, Leary, Guilford, and Eysenk, are integrated in the Big Five structure, which increased trust in the Big Five (Sanz, Gil, Garcia-Vera, and Barrasa, 2008). One of the cornerstones of marketing thought is undoubtedly consumer orientation; thinking about the product, the company and the way we „do business‟ from the consumer‟s viewpoint. In city marketing and especially in the case of the city‟s existing residents, consumer‟s orientation would have to be how the residents encounter the city they live in, how they make sense of it, which physical, symbolic or other elements they evaluate in order to make their assessment of the city. The field of cultural geography has dealt with such matters and has developed an understanding, which is useful at this point. Empirical study: A Survey In Kayseri This study has two aims: First, to develop personality items of city brand and to apply over the city of Kayseri, Turkey. Second, to measure brand personality of Kayseri and to share the outputs of the study with municipality and non govermental organizations of Kayseri, such as chamber of Commerce and Industry. Consequently, we will contribute to branding identity of Kayseri. The city of Kayseri, in middle of Anatolia became the location of four universities; namely Erciyes which was established in 1979, Meliksah (foundation University) which was 171 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo established in 2009, NuhNaciYazgan (foundation University) which was established in 2010 and Abdullah Gul (state) which was established in 2011, in the last five years. This development earns a new brand to Kayseri; namely the city of universities. According to YOK‟s Higher Education data, today approximately fifty thousands students study in these universities. And nearly twenty thousand students come from outside Kayseri. Hence, Kayseri becomes the city of universities. Before that Kayseri brand has known to be the home of the many industrial factories, and pastırma, manti and sucuk. Subjects, non-native students of Kayseri, were only asked to answer the survey about native people of Kayseri.Basically, We focused on merely native people of Kayseri. Because native people of Kayseri can represent distinctive Kayserian‟s image very well to non-native students. In the first part of the questionnaire, brand personality scale of the city of Kayseri was generated using brand personality dimensions and traits developed by Aaker (1999), Mervielde (1982), Saucier (1994), and Costa and McCrae (1992). In the second part, students were asked to tell the first three things which come to their mind when they hear the name of Kayseri. In the fourth part, demographic data regarding students‟ age, gender, duration of stay in Kayseri, income status, hometown, university and faculty were recorded. 13 variables regarding satisfaction and 16 personality traits were rated according to 5-point Likert scale. Positive or negative perception of each variable were measured through following answers: strongly agree (4 points), agree (3 points), undecided (2 points), disagree (1 point), strongly disagree (0 points). The mean of each 15 personality traits and its standart deviations were calculated in the range of 0-4 according to the demographic variables . After that, they are compared in Tables.The city of Personality items have been analysed in three groups and commented : Personality items which are rated 3,00 and over (strong perception),those which are rated between 2,00 and 2,99 (unsure perception), and those who are rated below 2,00 (weak perception). The research was conducted in order to evaluate how the city of Kayseri and the native population of Kayseri are perceived by the non-native students. Taking into account the constraints of time, costs and accessibility, a sample size of 800 participants was thought to be sufficient for the study. This study will form the basis of a larger study in the future. In this first phase of the study, the perceptions of Turkish students (non-notive) from outside Kayseri have been evaluated. In the second part of the research, foreign students‟ perception of Kayseri will be evaluated and analyzed. Before the actual survey conducted, questions of the questionnaire was revised through pilot studies; consequently, reliability factor was increased. The survey was conducted at Erciyes University and Meliksah University. In order to gather data, the questionnaire forms were hand-delivered to students, who wanted to participate, at two universities and also a copy of the questionnaire was uploaded at Google Drive so that it was shared using social media by students. The collected data were analysed using SPSS 15.0 program. Method and Findings In the study, firstly, frequency distributions of demographic data, which allow us to get to know the students more closely, were analysed. Secondly, data, which was obtained 172 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo through brand personality scale, are averaged out of 4.00 and analysed through comparing demographic data. Thirdly, students' level of satisfaction regarding the city of Kayseri were measured and later significant or meaningful differences -if there are any- between the groups were examined. And fourthly, students‟ open-ended statements about Kayseri were interpreted through content analysis. 1. Sample There are four universities in Kayseri. 3 of them (one is a state university, two are foundation universities) admit students and continue teaching for the 2012-2013 academic year. There are fifty-thousand students who receive education at the undergraduate, graduate and postgraduate levels at these universities Students coming from outside Kayseri, which form the main body of the study, make up 40% of the total number of university students in Kayseri. Therefore, our research pool consists of approximately 20 thousand students. Through random sampling, 285 domestic and 79 foreign students have been surveyed. After screening the completed questionnaires, some are regarded as dubious; and at the end, the forms of 267 Turkish students were evaluated. As mentioned earlier, in this study, perceptions of Turkish students from outside Kayseri was evaluated, however perceptions of foreign students who participated in the survey were excluded. 2. Analysis Students participating in the survey are classified according to their gender, university, accomodation type, population size of the city which they come from and duration of stay in Kayseri. Table 1 shows the frequency distribution of the groups. As seen on the table, among the 267 students, 59% (160) are male and 41% (107) are female. Moreover, 39% (104) of the participants study at Erciyes University while 61% (163) study at Meliksah University. At the time of the study, there was not enough data collected from NuhNaciYazgan University and Abdullah Gul University had not started admitting students. Consequently, these universities have not been included in the study. As a methodological approach, based on the brand personality theories, 15 personality traits for Kayseri were identified. After that, the participants were told to think Kayseri as human being and asked to asses the personality traits. These 15 personality traits were rated out of 4, standard deviations were calculated; and according to the demographic variables they are compared in Table 2, Table 3, Table 4 and Table 5. 173 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo Table 1.The Frequency distributiution of Demografic Factors. Demographic Faktors Male Female Gender Total Melikşah University Erciyes Total State Dormitory Private Dormitory Accomodation Rent home (n) 160 107 267 163 104 267 27 132 108 267 Total Bigger cities than Kayseri 113 Population of Smaller cities than 154 the city Kayseri (Homeland) 267 Total Less then one year 70 2-4 year 152 Living time in Five or more then five Kayseri 45 year 267 Total (%) 59 41 100 61 39 100 10,11 49,44 40,45 89,89 42,33 57,67 100 26,22 56,93 16,85 100 Notable aspects of personality traits could be analysed in three groups: Personality traits which are rated 3,00 and over, those which are rated between 2,00 and 2,99, and those who are rated below 2,00. Among the 15 personality traits, which were rated by the students, only the statement “(The people of Kayseri) like showing off” received a score above 3,00 (strong perception). Throughout all of the demographic variables, students clearly believe the people of Kayseri like showing off. The personality traits, which are rated between 2,00 and 2,99 by the students, are “disciplined”, “economical”, “hard working”, “enterprising”, “organized” and “loyal”. Among these, the highest rated (2,80) trait is “economical”. 174 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo Table 2:According to Gender, City of Kayseri Personality Perception of TheStudents Male Female No Personality Factors Std. Std. Mean Mean Deviation Deviation 1 People in Kayseri has discipline at work. 2,556 1,114 2,664 0,911 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Tolerant towards different cultures an ideas. In general, they are hardworking. They don‟t like extravagant (sparing). They are enterpreneur and pioneer. Çlose to each other and friendly to students. They are sophisticated people. They are generous to each other and students. They are modest. They areopen to dialog and adaptable. They are modern people. They are planned. they are trustworthy. They care about social responsibility They like showing up. 1,763 2,488 2,913 2,569 1,775 1,850 1,456 1,581 1,900 1,694 2,356 1,988 1,763 3,288 1,221 1,070 1,184 1,164 1,259 1,134 1,170 1,241 1,204 1,229 1,205 1,264 1,216 1,151 1,972 2,794 2,682 2,617 1,907 2,047 1,579 1,897 2,215 1,897 2,542 2,121 1,916 3,402 No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1,014 0,821 1,162 0,987 1,095 1,085 1,182 1,009 0,901 1,055 0,924 0,997 0,982 0,930 Table 3: According to University, TheCitiy of Kayseri Personality Perception of TheStudents MelikşahÜniv ErciyesÜniv Personality Factors Std. Std. Mean Mean Deviation Deviation People in Kayseri has discipline at work. 2,577 1,116 2,635 0,904 Tolerant towards different cultures an ideas. 1,779 1,222 1,952 1,009 In general, they are hardworking. 2,503 1,068 2,779 0,824 They don‟t like extravagant. 2,908 1,185 2,683 1,160 They are enterpreneur and pioneer. 2,564 1,166 2,625 0,977 Çlose to each other and friendly to students. 1,791 1,259 1,885 1,091 They are sophisticated people. 1,871 1,139 2,019 1,079 They are generous to each other and students. 1,485 1,183 1,538 1,165 They are modest. 1,601 1,245 1,875 1,002 They areopen to dialog and adaptable. 1,914 1,204 2,202 0,896 They are modern people. 1,699 1,238 1,894 1,033 They are planned. 2,368 1,212 2,529 0,903 they are trustworthy. 2,006 1,264 2,096 0,990 They care about social responsibility 1,779 1,217 1,894 0,975 They like showing up. 3,301 1,145 3,385 0,938 The personality traits, which are rated below 1,99 by the students are “tolerant”, “friendly”, “versatile”, “generous”, “modest-humble”, “adaptable”, open to change” and “sharing”. 175 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo Among these traits, the lowest rated (1,46) trait is “generous towards students and the community”. This was followed by statements in the order of; "modest and humble", "open for new experiences and adaptable", "sharing the gains of the society", “closer to each other and to students”, and “higly versatile in terms of capabilities”. In the study, the statement “(Kayseriens‟) like showing off” received the highest point, while the statement “(Kayseriens‟) are modest and humble” received a low point. The consistency in these two results is a sign that students answered the questions carefully. Table 4: According to Homeland (Bigger or smaller than Kayseri)The City of Kayseri Personality Perception of TheStudents. Smaller than Bigger than Kayseri Kayseri No Personality Factors Std. Std. Mean Deviation Mean Deviation 1 People in Kayseri hasdiscipline at work. 2,575 1,076 2,617 1,011 2 Tolerant towards different cultures an ideas. 1,708 1,170 1,948 1,119 3 In general, they are hardworking. 2,619 0,957 2,604 1,012 4 They don‟t like extravagant. 2,850 1,212 2,799 1,157 5 They are enterpreneur and pioneer. 2,655 1,084 2,539 1,103 6 Çlose to each other and friendly to students. 1,761 1,144 1,877 1,233 7 They are sophisticated people. 1,850 1,071 1,987 1,149 8 They are generous to each other and students. 1,460 1,195 1,539 1,161 9 They are modest. 1,673 1,073 1,734 1,226 10 They areopen to dialog and adaptable. 1,938 1,136 2,091 1,075 11 They are modern people. 1,602 1,177 1,903 1,142 12 They are planned. 2,283 1,089 2,539 1,103 13 they are trustworthy. 2,088 1,154 2,006 1,174 14 They care about social responsibility 1,717 1,138 1,903 1,119 15 They like showing up. 1,093 1,052 3,301 3,357 176 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo Table 5:According to Period of Stay, The City of Kayseri Personality Perception of TheStudents 1 year and 2-4 years / 5 years and over under / n= 70 n= 153 / n= 44 No Personality Factors Std. Std. Std. Mean Deviation Mean Deviation Mean Deviation People in Kayseri hasdiscipline at 1 work. 2,64 1,10 2,59 0,95 2,57 1,23 Tolerant towards different cultures an 2 ideas. 1,81 1,12 1,83 1,15 1,95 1,18 3 In general, they are hardworking. 2,50 1,07 2,70 0,91 2,48 1,09 4 They don‟t like extravagant. 2,67 1,26 2,86 1,14 2,93 1,19 5 They are enterpreneur and pioneer. 2,44 1,07 2,61 1,06 2,73 1,23 Çlose to each other and friendly to 6 students. 1,61 1,22 1,82 1,18 2,18 1,17 7 They are sophisticated people. 1,69 1,04 2,05 1,10 1,89 1,24 They are generous to each other and 8 students. 1,49 1,21 1,50 1,15 1,55 1,21 9 They are modest. 1,76 1,21 1,65 1,14 1,82 1,17 They areopen to dialog and 10 adaptable. 1,99 1,08 2,03 1,12 2,07 1,09 11 They are modern people. 1,89 1,12 1,73 1,13 1,75 1,35 12 They are planned. 2,49 1,10 2,48 1,05 2,18 1,28 13 they are trustworthy. 2,09 1,14 1,91 1,13 2,43 1,25 14 They care about social responsibility 1,81 1,13 1,77 1,10 2,02 1,23 15 They like showing up. 3,16 1,12 3,44 0,97 3,23 1,27 Conclusions The city of Kayseri, in accordance with the vision of Turkey in 2023, make strides in the areas of industry, tourism and education on national and international levels. For this reason, the city of Kayseri, local government, chambers of commerce and industry and a large number of opinion leaders frequently make assessments of the current situation and take new decisions/resolutions. In this context, this research suggests that all the efforts that put forth for Kayseri should be designed to contribute to a perception of the city brand, and also searches how Kayseri‟s brand personality is perceived. Since the study covers students who are from outside Kayseri, the results may not reflect the general perception; however, considering their social and economic potentials, university students are regarded as potential ambassadors to Kayseri in the their home cities. For this reason, the findings of this study are important. One of the most important results that emerged from assessing the findings is that Kayseri is not perceived by students as it is ought to be. For example; generally people of Kayseri are known for their philanthrophy but this trait is little known or recalled by the participant students. Moreover, generosity of the people of Kayseri is called into question and there is a strong perception that the people of Kayseri like showing off. Regarding this issue, it would not be wrong to argue that institutions and organizations of Kayseri have been inefficient in their interaction with the 177 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo students. Perhaps the most important recommendation that can be made is for municipality and other non-governmental organizations to establish closer relations with student clubs, to include university students in their activities or to support student activities through sponsorships. Aiming for socio-economic growth, industrialists and businessmen of Kayseri must develop employability and make institutional reformations in order to reverse the brain drain. Although it is not the subject of this study, it should be noted that the most important reasons for the brain drain are low wage policies and the fact that Kayseri‟s private sector has no corporate culture. References Aaker, J.L. (1997). Dimensions of brand personality.Journal of Marketing Research, 34(August), pp. 347-356. Aaker, J.L., Benet-Martinez, V., &Garolera, J. (2001). Consumption of symbols as carriers of culture: A study of Japanese and Spanish brand personality constructs. Journal of Personality and Social Psychology, 81(September), pp. 492-508. Aaker, D., and Joachimsthaler, E. (2000).Brand leadership.New York: Free Press. Aaker, J.L. (1997). Dimensions of brand personality.Journal of Marketing Research, 34(August), pp. 347-356. Aaker, J.L. (1997). 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Sipahi, B., Yurtkoru, S.E. veÇinko, M. (2008). SosyalBilimlerdeSPSS‟leVeriAnalizi, Beta Yayınevi, 2. Baskı. 179 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1567 Title A name given to the resource The Measurement of Brand Personality in the City Brand: a case of Kayseri Author Author EMIRZA, Emin SERI, Idris Abstract A summary of the resource. Cities all over the world use several conduits to promote themselves to relevant audiences such as investors, visitors and residents and in their efforts they commonly include striking logos and captivating slogans that feature in welcoming websites and advertising campaigns in national and international media. Because of those, city branding has in recent years become a prevailing activity within city management. Also brand personality component is major component of city brand identity. In this context, the main subject of the study is to evaluate brand personality dimensions of Kayseri city. This paper first describes the rise of city branding and the essentials of brand personality of city brand. Afterwards developed brand personality scale for products and service has been adapted to city branding. Sample of the study has been conducted at the universities in Kayseri. Data were collected via an online survey and face to face survey. Findings have been analyzed by factor and one way ANOVA analysis using SPSS 16 Program. Keywords: City Brand, Brand Personality, Brand Identity. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 978-9958-834-23-3 https://omeka.ibu.edu.ba/files/original/c1cc6c9c9b5d885982c47b534ca1c8d9.pdf 2d2e5a7a8b03fa72be664d22d4ff7720 PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo An Evaluation of Turkey’s Role in the “War on Terror”: ISAF Case İsa Eraslan Fatih University, İstanbul, Turkey isaeraslan@gmail.com After 9/11 World Trade Center terror attacks a large scale operation was conducted by US and its allies against Afghanistan. After the battle was won some thought the main aim was achieved but as the time passed by it was seen that destroying an authority and replacing nothing was not an effective solution. The ISAF operation has become an impasse for the NATO forces. The aim of this study is to discuss the role of Turkey in ISAF as a peacekeeping force. Among the many participants of ISAF mission Turkey has a significant role as the only NATO member with a Muslim majority. Thanks to her shared values and past with Afghan people and the effective strategy of Turkish armed forces Turkey has proved to be the most successful peacekeeping force in Afghanistan. Keywords: NATO, ISAF, Turkey, Peacekeeping, War on Terror. 174 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1584 Title A name given to the resource An Evaluation of Turkey’s Role in the “War on Terror”: ISAF Case Author Author ERASLAN, Isa Abstract A summary of the resource. After 9/11 World Trade Center terror attacks a large scale operation was conducted by US and its allies against Afghanistan. After the battle was won some thought the main aim was achieved but as the time passed by it was seen that destroying an authority and replacing nothing was not an effective solution. The ISAF operation has become an impasse for the NATO forces. The aim of this study is to discuss the role of Turkey in ISAF as a peacekeeping force. Among the many participants of ISAF mission Turkey has a significant role as the only NATO member with a Muslim majority. Thanks to her shared values and past with Afghan people and the effective strategy of Turkish armed forces Turkey has proved to be the most successful peacekeeping force in Afghanistan. Keywords: NATO, ISAF, Turkey, Peacekeeping, War on Terror. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-4564 https://omeka.ibu.edu.ba/files/original/f80021602d66732c920e8e0dc862c16d.pdf ccad62002def05869e16ecef4d84a1af PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo Problems of the Turkish Political Parties and the Turgut Ozal’s Party ANAP Selami Erdoğan Dumlupınar University, Kütahya, Turkey erdogans274@mynet.com Feyzullah Ünal Dumlupınar University, Kütahya, Turkey funal@dumlupinar.edu.tr A lot of political parties were established in Turkey, so far. But a large majority of them were dissolved or couldn’t live long-term. In this respect, Turkish political history is the history of short-lived political parties without CHP (Republican Populist Party). Both in Ottoman Period or Republican Period there were no durable political party. Whereas, when we look at United States and European Countries, we see long-lived and durable political parties, e.g. Republican Party in U.S and Conservative Party in U.K. etc. In this point, Turgut Özal’s Motherland Party can be considered one of the most excellent examples of the short-lived parties in Turkey. This party was established in 1983 and then, it has finished its life in 20 years. What was the reason for this finishing? İn this view, our study aims to indicate the common problems of the Turkish political parties by analysing Motherland Party (ANAP), for instance, weakness of institutionalism, leader-oriented extremely, patronage system etc. Keywords: Özal, ANAP, Turkish Political Parties, U.S Parties, European Parties, Weak institutionalism. 250 � https://omeka.ibu.edu.ba/files/original/390faa4dfeab46b1388f8e6af6628624.docx e3db11e964c04daeb99c49ac315aee34 https://omeka.ibu.edu.ba/files/original/4ad8dba5b07a7777fb1baa878e545ff0.pdf aac05096bfd58582a8c84fe293b4eb14 PDF Text Text International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Problems of the Turkish Political Parties and Turgut Ozal’s Party ANAP Selami Erdogan Dumlupinar University, Kutahya, Turkey erdogans274@mynet.com Feyzullah Unal Dumlupinar University, Kutahya, Turkey Abstract A lot of political parties have been established in Turkey, so far. But a large majority of these parties was dissolved or couldn’t stand long-term. İn this respect, the Turkish political history is also the history of short-lived political parties without CHP (Republican Populist Party). Both in the Ottoman Period and the Republican Period there were no durable political parties. Whereas, when we look at the United States and European Countries, we see long-lived and durable political parties, e.g Republican Party in U.S and Conservative Party in U.K. etc. At this point, Turgut Özal’s Motherland Party can be considered as one of the most excellent examples of a short-lived party in Turkey. This party established in 1983 and then, it finished its life in 20 years. What was the reasons for this finishing. İn this view, our study aims to indicate the common problems of the Turkish political parties by analyzing the Motherland Party (ANAP). And for instance, the weakness of institutionalism, extreme leader-oriented and the patronage system etc. Key words: Özal, ANAP, Turkish Political Parties, U.S Parties, European Parties, Weak institutionalism. Concept Of The Political Party İn today’s world, political parties are accepted as an indispensable element of the modern political systems. İn one sense, they created the contemporary democracy ( Özbudun, 1979: 1). İn liberal democracies, political parties serve as a mediator between the citizens and the government. Without the well-organized party system, representative democracy cannot function fairly ( Akgün, 2001: 71 ). Especially, after the period when the countries which were being ruled by democracy ( eg. England ) came out with a victory after II. World War, it is seen that political parties appeared with adopting democracy in many countries of the World. İn this respect, we are able to say that political parties have a crucial role in the rise of democracy (Özüerman, 1999:153 ). But it must be pointed that the political parties are not only seen in democratic systems. We are able to come across the political parties in totalitarian and fascist regimes. There are political parties in most of the states in the World. Because, political parties have important functions without looking at the types of the regimes. İf we think about its functions such as carrying the public’s wishes to the government, bringing up elite 1 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo administrators, representing the benefits etc., every regime feels the need to have political parties. When we look at the existence of the political parties in the World, we see that political parties come out on account of too many different reasons. Some of them appear to carry out an independence war against the colonialists (CHP in Turkey, Congress Party in India etc.), some of them appear because of the participation crisis (eg. The Democratic Party in Turkey ) or because of the crisis which is called the integration crisis, political parties may exist (Özbudun, 1979:25). These parties come out on account of differences such as language or religion (BDP, in Turkey). As a result, it is seen that political parties appear because of many different reasons. Transition To Democracy In Turkey And Political Parties The term of political parties is in fact a very new term. They were only in a few countries in the World in the 1850s (USA, England). But the political parties became common in the 20th century. When we look at the Ottoman Period we see the İttihat Terakki Party, when we look at the Republican Period we see the Republican People’s Party (Yanık, 2002:22). The latter was a leader-oriented party. İn one period (1930s), the leader of the CHP İsmet İnönü was announced as the “national Chief”. Then, DP was founded in Turkey in the year 1946 as an opposition party and multi-party system which was adopted with the election in the same year. İt can be said that the multi-party system was accepted because of many different reasons. For example, the fans of democracy won the II. World War, the threatening of the Soviets to Turkey, also the discontentedness of the one-party government etc. The elections which were held in 1946 were in fact unfair because the rule of hidden voting and open counting was not carried out. İnfact, it can be said that Turkey practiced the multi-party system in the coming elections which were held in 1950 DP surprisingly won the elections of 1950 by an outstanding range. DP tried to carry out liberal policies, civilian police. Although the Democratic Party showed great success inthe field of economy, it could not show the same success about political freedoms, it made pressure to the press and the civilian society. On the other hand, İt could not place intraparty democracy and the culture of the widespread democracy. Some anti-democratic applications of the DP to the press and oppositional ideas disturb the a number of its own deputies, for that reason they left the DP and founded the new Party, the Freedom Party (Hurriyet Partisi). As They won the elections, they thought that they were the real representatives of the public and that they could do as everything. Turkish Political Parties And Their Problems Hunderds of political parties have been established from the year 1946 when multi-party political life was adopted in Turkey to the present date. However, noticeably, it is seen that these political parties didn’t last for a long time. We should think of only CHP separate from these parties, because CHP was founded in the year 1923 (it was closed between 1981 and 1992) and has been able to survive until now. None of the parties except from CHP has lasted for as long (Tuncer, 1995: 1) . Increasing the number of political parties doesn’t mean that itstrengthened the pluralism and the democracy. Institutioanalisation of the political parties is important for a strong democracy. Besides, the multi-party system 2 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo should be carried on without interrupting. İt doesn’t mean that there is a pluralist democracy in a country, as inTurkey, where a lot of parties are established and then closed down. When we look at the political life of Turkey it is seen that the political parties are facing the problems of institutionalisation. From this respect, it is stated that the structure and the tradition of the state in Turkey is different from the Western Europe. According to commonly accepted opinion, while political parties appear based on the class system in the European Societies, the political parties in Turkey appear as fully leader-oriented parties rather than a class system (Özüerman, 1998: 95). On account of this, Turkish political parties become leader parties and the life of that party is limited to the life of its leader’s life (eg. Demirel’s party DYP, Özal’s party ANAP etc.).Whereas, in 1950s famous political thinker Duverger was telling us to the importance of the political party organizations, not charismatic leaders. On the other hand, lack of the institutionalism brings about so much volatility in the vote rates of political parties. We have seen that, the General Elections in 1990s. After the Özal’s leadership his party ANAP declined, similarly after the Suleyman Demirel’s leadership his party DYP weakened politically. Both ANAP and DYP became ineffective ordinary parties in the beginning years of 2000s. When political parties are talking about inTurkey, three basic features come to mind. Firstly the absolute sovereignty of only one person, secondly a common center which was extreme authorities and thirdly, weak local organizations. Deputy candidates of the party are mostly determined by the central organization, in fact the party leader determines them. The preselection results of the local organizations don’t regard by the central organization and party leader. İn this respect, one which is in front of all these is that the Turkish parties have the specialty of being the latter party. İn some political articles, Turkish leaders are compared with well-known powerful German leader Bismark (Türmen, 2011: 15) İnfact, even the source of the power that a leader hasn’t a legal authority but he has “defacto” authority (Özdalga, 2005: 49). The leaders who are at the top of the hierarchical structure in Turkey’s political parties, always use their authorities for protecting his or her surrounding’s ruling. This situation is reminding of us the “Iron Law of Oligarchy”. According to Robert Michels, a minority group in anorganization use all power, and it causes the degeneration of democracy (Michels, 1959: 29-49). Generally, a new opinion or the existence of a new person is not well accepted by the leader or his surroundings. The relationship of a leader with his surroundings depends on loyalty not on meritocracy (Çapoğlu, 1997: 13). The local authorities that come intogoverning by the votes of the members of the party in the province or sub-province congresses, are taken out of their duties by the leader at any time, for instance, in my province (Kütahya) in February 2013, city organization of the MHP was dissolved by the central organization without a court decision. The will of the members who voted are neglected. In fact this situation is not a new situation in the Turkish political system, the central organizations or leaders of the political parties haven’t noticed the local organizations since İttihat Terakki and CHP (Kabasakal, 1995: 130 ). That is the process of the parties in the Turkish party system which goes on a net of the leader not to a democratic ground (Çarkoğlu, Erdem, Kabasakal, 2000: 36 ). The oligarchical structures of political parties in Turkey prevents the change and protects the status quo. Different views don’t occur at the party except for the ones which the leader thinks about. This prevents the parties from improving themselves and to produce political views according to changing conditions. This causes a vicious circle. Leaders and their 3 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo surroundings had their ways to protect the governing with all their organizational efforts after they gain control of the party.The person who gains the control of a political party in Turkey cannot be taken out of his position easily, even if he or she had lost several elections (e.g Mesut Yılmaz) (Akgün, 2001:86). Nevertheless, there are a few exceptions in Turkey. Namely, in 1972 Bülent Ecevit won the party leadership competition against the current charismatic leader İsmet İnönü. Similarly, in 1991 former Prime Minister Yıldırım Akbulut lost the party leadership competition against to Mesut Yılmaz. On the other hand, generally current party leaders win that competition , in Turkish politics. Because, selecting delegates are usually selected or appointed by the central organization. This anti-democratic inner structure is valid for most of the parties in Turkey. The leaders have always been dominant rather than the institutional identity of the party or the program of the party since the day we accepted the multi-party political systems up to now. Also, Turkish political parties have not fundamental principles. The in electoral process, the programs of the parties aren’tdebated in almost. At that time, The political party leaders tried to persuade people by using populist discourses, e.g. I remember that Suleyman Demirel said in the 1991 General Elections “I will give you five more liras from others”. Also when they come to power they applied patronage politics. They distributed some sources to the supporters (e.g, Demirel). For that reason Turkish voters don’t believe politicians and political parties. Populist politics and patronage system in Turkey alienated Turkish citizens to the political sphere. This negative image eroded the roots of political parties. According to some thinkers the military impacts are shown as the fundamental cause of the political parties not being able to institutionalize in Turkey. After the process in which Turkey entered the multi-party system, Turkey encountered three coup d’etat. The first one was in 1960, the other was in 1971 and the last one is 1980. Beside this, in 1997 and 2007, some serious interventions in civil government and political parties were observed. Since 1983, approximately 15 political parties have been dissolved (Akgün, 2001: 86). Every coup d’etat prepared its constitution in order to shape the political and societal sphere. Furthermore, the product of the 1980 Coup which is known that Law of Political Parties and Election Laws are still in force. Military regimes moved civil governments from politics. Some of the politicians were hanged; many political parties and associations were closed. Numerous citizens were prohibited from participating in politics. Laws in which majority of the citizens was prohibited to involve in politics came into force. Citizens could not participate in the politics of the new established parties after the coup. During the same period, two constitutions which do not rely on civil negotiation are in force. Due to this, “coup d’etat”s in Turkey created a gap in politic socialization (Çarkoğlu, Erdem, Kabasakal, 2000: 3940). This situation prevented the existence of democratic political culture. Moreover, it shortened the life of political parties because of the fact that many of the parties were closed. Beside this, it is claimed that party leadership emerged as a new and significant paradigm not only in Turkey but also in different parts of the world. During propaganda periods, marketing techniques were used and image selling made abundantly (Poggi, 2002). According to this, image of party leadership became significant dimension. Throughout the subordination of ideologies, differences of political parties were blurred; party leaders became the most important dynamic in the elections (Yıldız, 2002:88). This phenomenon 4 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo has especially valid for 1980. When we look at the political parties of Turkey, we can easily detect that almost all of them has charismatic leaders such as Demirel, Ecevit and Özal. Turgut Özal’s Party: ANAP Actually, Turgut Özal and ANAP is a beneficial example to understand the Turkish political party question. Özal drown such a profile that he has the ultimate authority since he established his party in 1983. Even if He became President of Turkey, acted as ANAP party leader. He chose the way in which decisions were made only by himself without asking anybody. For instance, he informed Yıldırım Akbulut at the last moment when he appointed Akbulut as a Prime Minister (Acar, 2002: 170). During the Akbulut’s period, Gulf Cirise exploded, Özal intervened the governmental policies, for that reason General Stuff of Turkey resigned.At the same time, Özal intervened economic affairs, he tried to prevent populist applications of Akbulut, then Mesut Yılmaz. During his premiership hadn’t applied populist politics without any exceptions. On the other hand, he interested in intra-party issues of ANAP. Although it was a short period, his wife was elected as a party chairman of İstanbul prominence by Özal. He selected the most of the deputy candidates. This circumstance can be observed in most of the times in Turkish politics. ANAP had the same characteristic with former political parties. It is hard to say that there was an intra- party democracy in ANAP. M. Keçeciler, who has strong and close ties with Özal, says that it is a must to bring democracy in the party level (Keçeciler, 2000:33). Although Özal was a clever reformist Turkish politician, he made many significant reforms. He liberated Turkish economy; he opened it to the liberal system of the world. He terminated the importation barriers; he ended the absence of some products. Beside this, he minimized public bureaucracy and destroyed the negative image of the state. He internalized the philosophy of “state for people”.He opposed the “National Security State”. After he became president of Turkey, he ended the Kurdish speech prohibition. He defended freedom of religion, thought and conscience (Erdogan, Acar, 2012: 3) However, mostly Özal did all this expansion by himself. He did not choose the deliberation method. While he was making liberal reforms, a large majority member of his party opposed these changes (e.g Kurdish speaking law). Özal’s his own wasn’t thinking state-oriented, but his friends were. Probably because of this reason, he defended the Presidential system. Unfortunately after Özal’s party leadership, his party downed to opposition. And ANAP encountered intra-party problems, and party politics changed sharply. Unlike Özal policies under the leadership of Mesut Yılmaz party adopted the state-oriented policies, not liberal policies.If ANAP wasn’t a leader party, It couldn’t change its politics easily. İn this respect, political parties should have fundamental politics. That is, should be institutionalized. It can be said that, due to the lack of instutionalization, later his party was eradicated from political life. At this point, it must be stated that, In 1997 ANAP leader Mesut Yılmaz cooperated with military to become Prime Minister. Because of this cooperation Turkish voters rejected ANAP. Actually, he and his party was a summary of Turkish political leadership and Turkish political parties. As we tested before,When the military supports a party which lose elections. 5 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo References Akgün, Birol (2001), “Aspects of Party System Development in Turkey”, Turkish Studies Vol.2, No.1, s.71-92, London. Acar, Feride (2002), “Turgut Özal”, Political Leaders and Democracy in Turkey, Lexington Book, New York. Çapoğlu, Gökhan (1994), “Türkiye’de Siyasi Tıkanıklığı Aşmak İçin”, Stratejik Araştırmalar Vakfı, Ankara. Çapoğlu, Gökhan (1997), “Partiler Sistemi, Parti İçi Demokrasi ve Lider Sultası”, Yeni Türkiye Dergisi, S.13. Duverger, Maurice (1993), Siyasal Partiler, (Çev: Ergun Özbudun), 4. Baskı, Yayınevi, İstanbul. Bilgi Erdem, Tarhan - Çarkoğlu Ali, Kabasakal Mehmet, (2002), Siyasi Partilerde Reform, TESEV, İstanbul. Erdoğan, Selami -Acar, Eray, (2012) “Legacy of Turgut Özal and the Sustainable Transformation of Turkey with AK Party governments” 3th İnternational Symposium on Sustainable Development at Burch University, s.102-111, BosniaHerzegovina Kabasakal, Ali.,(1995), “Türkiye’de Siyasal Parti Örgütlenmesindeki Kısıtlamalar”, Siyasi Partiler ve Democracy Sempozyumu, TESAV. Keçeciler, Mehmet (1995), “Parti İçi Demokrasi Açısından Siyasal Partiler” Siyasal Partiler ve Demokrasi Sempozyumu, TESAV. Michels, Robert (1959), A Sociological Study of The Oligarchical Tendencies of Modern Democracy, Dover Publications, New York Özbudun, Ergun (1979), Siyasal Partiler, 3.baskı, A.Ü.H.F. Yay. , Ankara. Özdalga, Haluk (2005), Kötü Yönetilen Türkiye, Kitap Yayınevi, İstanbul. Özüerman, Tülay, (1998), Türkiye’nin Batılılaşma ve Demokratikleşme Açmazı, D.E.Ü. Yay., İzmir Özüerman, Tülay, (2000), “Türkiye’de Siyasal Partilerin Yeniden Yapılanması”, Mülkiye Dergisi Poggi, G., (2002), Modern Devletin Gelişimi, (Çev: Şule Kut, Binnaz Toprak), 2.baskı, Bilgi Üniversitesi Yay., İstanbul. Tuncer, Erol, (1995), Siyasi Partiler ve Demokrasi, TESAV. Türmen, Rıza (2011), “Bismark ve Günümüz Türkiyesi” Radikal Gazetesi , 20.11.2011. 6 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Yıldız, Nuran (2002), Türkiye’de Siyasetin Yeni Biçimi, Phoenix, Ankara. 7 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1631 Title A name given to the resource Problems of the Turkish Political Parties and the Turgut Ozal’s Party ANAP Author Author ERDOGAN, Selami UNAL, Feyzullah Abstract A summary of the resource. A lot of political parties were established in Turkey, so far. But a large majority of them were dissolved or couldn’t live long-term. In this respect, Turkish political history is the history of short-lived political parties without CHP (Republican Populist Party). Both in Ottoman Period or Republican Period there were no durable political party. Whereas, when we look at United States and European Countries, we see long-lived and durable political parties, e.g. Republican Party in U.S and Conservative Party in U.K. etc. In this point, Turgut Özal’s Motherland Party can be considered one of the most excellent examples of the short-lived parties in Turkey. This party was established in 1983 and then, it has finished its life in 20 years. What was the reason for this finishing? İn this view, our study aims to indicate the common problems of the Turkish political parties by analysing Motherland Party (ANAP), for instance, weakness of institutionalism, leader-oriented extremely, patronage system etc. Keywords: Özal, ANAP, Turkish Political Parties, U.S Parties, European Parties, Weak institutionalism. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 978-9958-834-23-3